This paper suggests a new and comprehensive approach to the assessment of the material well-being at the individual level by constructing a multidimensional index. Using this approach, material well-being is understood as a generic notion that covers a number of different domains, whereas the concept of domain is used to distinguish between
RUSMOD is a static tax-benefit microsimulation model for Russia. The model can be used for ex post and ex ante evaluation of reforms of personal income taxation and social benefits in Russia. In addition, being compatible with EUROMOD, the Russian model is suitable for simulation of crosscountry policy transfers. The aim of this paper is to shed light on various aspects of the model. It discusses specific problems arising in the evaluation of unreported income and benefits non-take up in Russia. The final estimates of poverty and inequality from RUSMOD are very close to those based on National accounts; hence, the model can be seen as a reliable tool for evaluating the current performance of the Russian tax-benefit system and the distributive impact of potential tax-benefit reforms. Then the paper provides an example of application of the model-an analysis of alternative scenarios for improving the design of child allowances in Russia. Currently, this benefit has a poor targeting performance and varies across regions of Russia in terms of design and generosity, which raises serious equity concerns. Redirecting these resources to the poor-by means of better targeting and raising the benefit amounts-brings about significant improvements in overall and child poverty indicators even at the current level of spending. The most sizable impact on poverty is achieved by implementing the unified national design of the program.
This paper shows that the system of taxes and transfers in Russia has a limited redistributive capacity vertically (among different income groups)-particularly when pensions are assumed to be deferred income-though it does achieve significant horizontal redistribution (among sociodemographic groups).The main results of the analysis, concern the Russian fiscal system's limited redistributive effect, low effectiveness in poverty reduction, and relatively poor net financial impact on all demographic groups except pensioners. Firstly, benchmarking shows that the Russian system of direct taxes and transfers does not compare well with countries that achieve larger redistribution, in particular European Union countries. Secondly,net direct taxes (incorporated into disposable income) are always equalizing, but net indirect taxes (incorporated into consumable income) are unequalizing in both the benchmark and the sensitivity analysis scenarios. Thirdly, under the benchmark scenario, the net effect of the fiscal system is actually povertyincreasing. Finally, it appears that all households of working-age people with and without children are net payers under the Russian fiscal system, while only pensioners' households benefit from the fiscal redistribution in Russia under both scenarios.The main conclusion that emerges from this analysis is that there are both equity and efficiency reasons to review the tax and social spending structure. Such an exercise may require, however, a good understanding of the political economy of a potential reform.
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