Enhancing performance of tax inspectors in Russian Federation

Introduction. In modern Russia questions related to the improvement of the efficiency of tax collection are of a great interest. To enhance the efficiency, developing countries introduce various incentive wage schemes for tax inspectors, which are tied to the results of inspections. However, it is not the case in developed countries. It is important to understand which wage scheme for tax inspectors should be used and which wage scheme is already in use in Russia. Aims. Evaluate the properties of the wage scheme for tax inspectors in Russia and propose recommendations for improving its efficiency in terms of tax collection. Methods. Comparative analysis, generalization and extrapolation of results, econometric estimations on panel data. Results. We have identified factors that influence the selection of efficient and performance-based contracts for tax inspectors. The efficiency indicators of tax collection have also been identified. An empirical analysis showed a weak correlation of tax inspectors wages and tax collection efficiency indicators (elasticity of 0.14) and a high correlation with the alternative cost of labor. Conclusions. The existing system wage scheme for tax inspectors in Russia is better characterized as an efficient contract rather than a performance-based one. The key recommendation is to use a performance-based contract tied to a single indicator of the efficiency of tax collection adjusted according to the results of pre-trial and judicial appeals. The appealed tax sanctions should be excluded from the calculation of bonuses, and for appealed, but not canceled inspections, bonuses should be payed later.