The Façade of Fiscal Federalism in Russia

Since the early days of privatization, political conflicts between Moscow and Russia’s other regions have helped determine the contours of the country’s political space. Tax revenue centralization is one such outcome of this constant tension. For instance, the percentage of levied funds which are allocated directly to federal subjects fell from 65% in 1999 to 30% today. With these resources gone, unstructured transfers from the capital to the regions have become an important component of regional budgets, as well as a powerful instrument to reward loyalty.

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