Revenue Sharing in Russia

Abstract

The Russian system of federalism is in the midst of a difficult transition from a highly centralized to a more decentralized regime. It is a reasonable proposition that the final solution will somehow be a kind of assignment system, but it is unclear what path will have to be followed to reach that stated goal. The present system of revenue sharing is based on shared taxes and subventions. It is a two-tiered system, with the federal government laying down the rules for central–oblast sharing, and each oblast making the rules for the local governments within its jurisdiction. This paper updates a World Bank analysis of the revenue-sharing system in the Russian Federation, using actual data for 1992 and the most current tax-sharing rules and adds some empirical evidence to what is known about the intra-oblast dimension of revenue sharing.