An Analysis of Alternative Measures of Fiscal Capacity for Regions of the Russian Federation

Some measure of fiscal capacity should be an important component of the system of equalization transfers for the regions of the Russian Federation. In order to enhance the understanding of the concepts and measurement issues involved, ISP Working Paper 97-3 discusses the concept of fiscal capacity as well as some general measurement issues. In that note, six measures are presented that can be used to measure the fiscal capacity of subnational regions. These six measures are (1) current or lagged revenue collections, (2) per capita personal income, (3) gross regional product, (4) total taxable resources, (5) the representative tax system and (6) the representative tax system using regression analysis.The purpose of the current note is to actually compute various measures of fiscal capacity for the subjects of the Russian Federation, and to demonstrate how these measures are computed. This is done in Section II. Next, Section III will present a comparison of each of the measures of fiscal capacity that are computed in Section II. Section IV contains a summary and some concluding remarks.