Excessive Bureaucratic Administration is an Institutional Barrier

The Business Research Center of the Higher School of Economics (HSE) has recently released the outputs of the survey of managers of 4,600 large and mid-sized enterprises. The survey was carried out in May.
According to the results of the survey, most top managers say that the economic situation of their enterprises is still worse than that before the crisis. According to managers, the main obstacle to development is "insufficient demand in the enterprise's output"; the above factor was pointed out by 45% of respondents. "The high level of taxation" was rated second by 43% of respondents. Lack of funding, uncertain economic situation and high interest rate on commercial loans were mentioned by 36%, 34% and 30% of respondents, respectively.

The outputs of the survey of top managers of Russian enterprises cause no surprise. As was stated earlier, lack of demand on domestic goods was caused by higher demand on the import which situation according to the data of Rosstat resulted in higher import growth rates in January-February 2013. In particular, it concerns food industry where early in 2013 a drop in production was justified by higher growth rates of import of food and agricultural products.



Fig. 1. Dynamics of individual macroeconomic indices in January-February 2013 as % of the previous period.
Source: Rosstat

As regards the excessive level of a tax burden, as seen from Table 1 in Russia in general the level of a tax burden (in the period under review it was on average 35-36%) is not excessively high and fairly comparable (while without taking into account the market situation component of the load justified by a favorable global oil price situation it is even lower2) to the average level of load in OECD countries in the past 12 years. 


Table 1.

Tax burden in OECD states in the 2000-2011 period (% of GDP)

Source: OECD (http://stats.oecd.org ).

So, it can be supposed that Russian enterprises suffer primarily from excessive tax administration and only then from the level of a tax burden. At the same time, excessive bureaucratic administration is an institutional barrier for expansion of production.


М.V. Kazakova, PhD (Economics), Heat of the Economic Development Department


1 http://www.iep.ru/files/text/RED/Russian_Economic_Developments_05_2013.pdf
2 For more detail, see S.G. Sinelnikov-Murylev, P.A. Kadochnikov and M.V. Kazakova. The Analysis of Structural and Market Component of Tax Burden in the Russian Economy //IEP treatises, No.129R, 2009 - p.189 (also available on the Web-site: http://www.iep.ru).