Panel Data Assessment of the Impact of Tax Expenditures on Uzbekistan's Regional Budgets
Year: 2026
Type: article
Abstract: Tax expenditures granted by the central government reduce the revenues of subnational budgets that do not participate in the decision-making process, yet their regional fiscal costs are rarely measured. In Uzbekistan, the Tax Committee reports tax expenditures at the national and taxpayer levels, while regional budgets receive shares of corporate profit tax and personal income tax revenues and fully retain property, land, and turnover tax revenues. The extent to which regional budgets lose revenue as a result of these tax reliefs, and whether such losses are offset by an expanded tax base or lead to reduced fiscal self-sufficiency, remains unclear. This study measures the revenue losses of 14 regional budgets using taxpayer-level records and estimates their association with fiscal stability indicators through a fixed-effects panel model covering 2021–2025 (70 observations), employing cluster-robust inference and the wild cluster bootstrap method. Regional budgets lost 13.3–16.1% of their own revenues during 2023–2025, while official regional tables underestimated these losses by up to a factor of 2.07. Across regions, larger revenue losses were associated with faster revenue growth; however, this association was not statistically significant within regions (β = 2.008, p = 0.127). A 10-percentage-point increase in the lagged revenue-loss share was followed by a 6.1-percentage-point decline in the share of expenditure covered by own revenues (β = −0.608, cluster-robust p = 0.008, bootstrap p = 0.050), closely corresponding to the mechanical effect implied by the mean coverage ratio of 0.60. The findings do not provide evidence that centrally granted tax reliefs generate sufficient additional revenue to offset their fiscal costs at the regional level. Regional tax expenditure reporting, targeted assessment of the relatively small number of taxpayers accounting for 80% of revenue losses, and an explicit compensation mechanism are recommended, particularly in light of the changes introduced in 2026, when a portion of value-added tax revenue is shared with regional budgets.
Source: ECONOSCITECH INTEGRATION
Institution: Termez State University
Language: English
Field: Social Sciences
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7225643710
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