Fiscal and Social Effectiveness Assessment of the Personal Income Tax Reform in Russia

Abstract

The reform of personal income tax (PIT) that began in 2021, consisting in the introduction of a progressive scale with a rate of 15% on incomes of over 5 million rubles a year instead of the previously established 13%, assumes a preliminary economic assessment. The purpose of the article is to develop and test analytical coefficients for assessing the fiscal and social effectiveness of the income tax reform. For this purpose, global (macroeconomic) and local (industry-level, project-level) performance indicators are introduced. As a global fiscal efficiency measure, it is proposed to use the ratio of additional budget revenue generated by the introduction of a progressive personal income tax scale to public expenditures (the expenditure part of the consolidated budget). If the received amount of additional budget revenue from the introduction of the progressive personal income tax scale is more than 1% of gross domestic product (GDP), then the reform has the property of global fiscal efficiency; otherwise, the fiscal effect of the reform is considered insignificant. Similarly, the concept of a global indicator of social efficiency is introduced in the form of the share of the change in the coefficient of funds before and after the tax reform to the original value of the coefficient of funds. Then the following heuristic rule can be used: if the coefficient of funds after the introduction of the progressive personal income tax scale changes by more than 25% compared to its value before the reform, then the tax reform itself has the property of global social efficiency; otherwise, the social effect of the reform is considered insignificant. If the additional revenue received thanks to the reform makes it possible to multiply the socially significant areas of the national project «Healthсare», then the reform has the property of local social and fiscal efficiency. The calculations carried out using data from the international database World Inequality Database allowed us to make the following conclusions. The initiated personal income tax reform does not have the properties of global fiscal and social efficiency, but it is important for the fundamental acceleration of the national project «Healthсare». This allows us to speak about its local social and fiscal efficiency. The proposed analytical tools can be used in the system of state regulation in the design of tax reforms.