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COMMON PART

Project Number23-28-00365

Project titleTransformation of taxation of labor, citizens' capital and value added in order to increase the welfare level

Project LeadPugachev Andrey

AffiliationP.G. Demidov Yaroslavl State University,

Research area 08 - HUMANITIES AND SOCIAL SCIENCES, 08-155 - Prognosis of social and economic development, governmental regulation of economy and regulation of socio-economic processes

Keywordstaxes, taxation, potential, inequality, social inequality, monetary inequality, welfare, poverty

PROJECT CONTENT

Annotation
On March 16, 2022, at a meeting on socio-economic support for the subjects of the Russian Federation, the President noted: "even in the current difficult situation, we need to achieve a reduction in poverty and inequality." In modern crisis conditions, attention to the level of well-being of citizens also comes to the fore, especially since it has not been possible to increase it in recent years. Income taxation, as one of the instruments for reducing income inequality, did not help to smooth out inequality and did not stimulate the growth of well-being. Currently, the problem of inequality is also exacerbated by the poverty of a large number of citizens. According to various estimates, 12-20% of the population are poor. At the same time, since 2021, the approach to determining the poverty line has been changed: the subsistence minimum is determined not on the basis of the consumer basket, but depends on the median value of the average per capita monetary income of the population. It is obvious that the existing approaches to the definition of poverty did not correspond to the realities of life. The composition of the consumer basket has not been revised since 2012. The new approach also raises certain questions and concerns. Determining the structure of consumption by decile groups today also does not correspond to reality, since it does not take into account the quality of the products consumed: in the diet of the least well-off citizens, products are replaced with low-quality, with animal fat substitutes, GMOs. The poverty of working citizens and young people is a new challenge for Russian society and the state. The current taxation system does not help to smooth out inequality, but, perhaps, on the contrary, strengthens it due to the existing implicit elements of the regression of rates. The potential of taxation can be revealed by increasing the progression of personal income tax, introducing a tax-free minimum and improving the system of personal income tax deductions with an emphasis on strengthening social deductions and, above all, deduction for children. The introduction of a non-taxable minimum at the same time requires a detailed analysis, since in the current system of personal income tax distribution there is a risk of a decrease in personal income tax receipts for the budgets of many regions, therefore it is also necessary to develop ways to improve the mechanism of personal income tax distribution. In terms of indirect taxation of consumption, the expediency of establishing reduced VAT and excise rates for certain categories of goods requires research - to what extent this contributes to reducing inequality. The scientific novelty of the research consists in the development of theoretical and methodological approaches to determining the potential of tax impact on transforming inequality and improving the welfare of citizens in Russia. The object of the study is the potential of taxation to smooth out the transforming inequality and improve the welfare of citizens. The subject of the study is the financial and economic relations that arise between the state and society regarding the impact of tax instruments on inequality and the well–being of citizens. The study will answer the following questions. Do the current tax instruments in Russia smooth out inequality? Do they contribute to improving well-being? From the perspective of S. Kuznets' modified curve, does taxation in Russia influence the dependence of inequality on economic development and well-being? Which tax instruments are most suitable for smoothing the transforming inequality? Which of the existing tax instruments are the most effective? What tools should be implemented and improved? Does the introduction of income tax progression in 2021 contribute to smoothing social income inequality? Is income taxation or indirect taxation of consumption more effective in terms of smoothing social inequality?

Expected results
It is planned that, based on the study of the potential of tax instruments for smoothing social inequality, concrete proposals will be formed to enhance the tax impact of the state on overcoming excessive stratification of citizens by income and improving well-being. As part of the testing of the modified S. Kuznets curve, the most effective factors of tax influence on the ratio of inequality and economic development were determined, taking into account the characteristics of the current economic cycle. The tendencies of the modern transformation of inequality in Russia are determined. The effects of income and indirect taxation, as well as tax deductions, on social inequality are estimated. The concrete implementation of the project finds in the framework of: - formation of a theoretical and methodological basis for the potential of tax impact on inequality and welfare improvement; - systematization of the factors that determine the impact of the state on inequality and the improvement of well-being; - developed methods for assessing the potential of tax impact on inequality and welfare improvement; - the proposed concept of realizing the potential of tax instruments for smoothing inequality and improving well-being. These expected results are planned to be presented in the form of a consolidated analytical report with proposals for developing the potential of tax impact on inequality and sent to the Ministry of Economic Development of the Russian Federation, the Ministry of Finance of the Russian Federation, the Federal Tax Service of the Russian Federation, the Government of the Yaroslavl Region. The results of the research will be used in the preparation of the dissertations of Pugachev A.A., Kirsanov I.A., the final qualifying work of Ryabinina S.E. The results of the study will be used in teaching the disciplines "Tax potential of the region: features of assessment", "State Tax Management", "Tax Planning" at the Faculty of Economics of the Yaroslavl State University named after P.G. Demidov. The state registration of the results of intellectual activity is planned to assess the potential of taxation to smooth out inequality and improve welfare in Russia. Within the framework of the project, it is planned to publish a monograph, a series of scientific articles in journals included in the Web of Science, Scopus, RSCI, the list of the Higher Attestation Commission, as well as state registration of the results of intellectual activity to assess and develop the potential of instruments of tax impact on inequality and welfare. It is planned to present and discuss the interim and final results of the project at scientific conferences, including international ones, as well as the publication of relevant results in scientific collections of conferences.

REPORTS