Assessment of the formation and volume of tax expenditures in the federal budget

About the author:

Svetlana E. Demidova, Cand. Sci. (Econ.), Associate Professor, Department of Public Finance, Faculty of Finance, Financial University under the Government of the Russian Federation (Moscow); demidovapsk@gmail.com

Abstract:

This article analyzes approaches to the formation of tax expenditures in the federal budget, their volumes, and their interconnectedness with state programs and national development goals. The concept of tax expenditures is based on the premise that tax benefits and preferences should have a greater effect than direct methods of budget financing, such as subsidies. Tax expenditures in the federal budget are primarily focused on stimulating the oil and gas industry, with a significant amount associated with VAT and income tax. The risks of tax incentives, caused by both foreign policy factors and internal structural features of the economy, are considered. Conclusions are drawn that the risks of federal budget revenue losses are increasing. Simultaneously, the list of expenses eligible for investment tax deductions is expanding, although they can be considered productive tax expenditures since the effect of self-sufficiency in recovering lost budget revenues is expected. The primary direction for improving tax expenditures is proposed to involve enhancing the realism of assessments, increasing transparency, and ensuring the targeted nature of tax expenditures by reflecting them in government programs.

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