The differentiation of the authority in tax incentives among the federal and regional levels. Fiscal implications
The authors study the problems associated with the differentiation of the authority to establish tax incentives among the federal and regional government bodies and assess the corresponding negative impact on the tax competition. In is shown that the federal intervention in the regional tax privileges setting may lead to a distortion of vertical tax competition, a shortfall in tax revenues in the regional budgets, as well as to the migration of the tax base between regions, thereby distorting the real pocture of the profi ts allocation. The results obtained can be used by federal and regional public authorities in the development of proposals for improving mechanisms of tax privileges provision and interbudgetary transfers optimization.