• International Journal of Technology (IJTech)
  • Vol 12, No 7 (2021)

The Interrelation between Digital and Tax Components of Sustainable Regional Development

The Interrelation between Digital and Tax Components of Sustainable Regional Development

Title: The Interrelation between Digital and Tax Components of Sustainable Regional Development
Natalia Victorova, Elena Vylkova, Vladimir Naumov, Natalia Pokrovskaia

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Cite this article as:
Victorova, N., Vylkova, E., Naumov, V., Pokrovskaia, N., 2021. The Interrelation between Digital and Tax Components of Sustainable Regional Development. International Journal of Technology. Volume 12(7), pp. 1508-1517

Natalia Victorova Peter the Great St. Petersburg Polytechnic University, 29, Politechnicheskaya St., St. Petersburg 195251, Russia
Elena Vylkova North-West Institute of Management, branch of Russian Presidential Academy of National Economy and Public Administration, St. Petersburg, 199178, Russia
Vladimir Naumov North-West Institute of Management, branch of Russian Presidential Academy of National Economy and Public Administration, St. Petersburg, 199178, Russia
Natalia Pokrovskaia Saint Petersburg State University, St. Petersburg, 199034, Russia
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The Interrelation between Digital and Tax Components of Sustainable Regional Development

The paper explores the relationship between digital characteristics and tax potential of the constituent entities of the Russian Federation as factors of sustainable development of territories and economic growth. The purpose of the study involves development and testing of a methodology for assessing the level of digitalization in Russian regions and its relationship with their tax potential, which has not been sufficiently developed in the available scientific research by Russian and foreign authors. For this purpose, cluster and factor analysis were applied with the use of Rstudio, the IBM SPSS statistics package, and the Anaconda Navigator graphical interface. The following data were studied: the number of active subscribers of fixed and mobile access, subscribers of fixed and mobile broadband access as well as mobile communication devices for all constituent entities of the Russian Federation. The authors identified the worst and best regions in terms of mobile and fixed communications. It was concluded that the regions’ readiness for digital transformation is determined by the general level of their economies. Significantly larger tax revenues per capita are generated in regions with a highly developed IT component, which is the basis for solving the problems of sustainable development of such territories. The economic situation in a region, its gross regional product, and its tax potential create the basis for digitalization of each constituent entity of the Russian Federation. Significant tax revenues per capita are the key to the success of the territories in the IT sector. Promising areas for further research are: (1) expansion of the indicators used and time horizons; (2) extrapolation of the results to other countries and groups of countries; (3) use of the methods and models that have proven themselves when working with short series, e.g., autoregressive integrated moving average models.

Digital technologies; Region; Russia; Tax potential; Tax sustainable development


    The importance of the problem of national competitiveness on a global scale is increasing in the context of global environmental change, political instability, economic crises, social revolutions, and technological and other challenges. Sustainable regional development is of great importance for the economic growth of the state (Berawi, 2016; Berawi, 2018), so it is comprehensively studied in various scientific publications (Carroll and Stanfield, 2001; Kharlamov and Kharlamova, 2019). It is more flexible and efficient than national sustainable development, and allows one to capture the features of the economic  development (Rodionov et al., 2018) and ecological potential (Mamraeva and Tashenova, 2020) of the territory more sensitively. At the same time, a review of previous studies shows that sustainable regional development is of particular importance for the states whose territories are characterized by significant diversity, e.g., for China (Zheng et al., 2021), Indonesia (Rahma et al., 2019), European countries (Prokop et al., 2019; Davidescu et al., 2020), and Russia (Bubnov and Bubnova, 2018; Kudryavtseva et al., 2020).

Region-specific data studies aim to identify determinants of sustainable regional development that can be extrapolated to other territories. For instance, the team of authors led by Gutman et al. (2018) as well as Leksin and Profiryev (2017) highlight indicators of sustainable development of the northern regions of Russia; Gutman and Rytova (2020) characterize the indicators of sustainable development of smart cities, Zaborovskaya et al. (2019) assess the strategy of sustainable development of Leningrad region, etc. The information and technology component is the basis for sustainable development (Hilty et al., 2005; Jovovic et al., 2017), and it has an effect upon all its other components (Avram et al., 2019).

The state of the information technology (IT) component, the information society, and e-government in international rankings of the development of the information society is usually analyzed through the telecommunication infrastructure index (Park and Oh, 2018; Abu-Shanab and Osmani, 2019). This index takes into account the number of internet users, personal computer users, cellular subscribers, fixed telephone subscribers, etc. This approach takes into consideration only the information infrastructure that is the lower level of the information society. It is advisable to take into account the efforts aimed at creating and implementing innovations to study the upper levels of the information society associated with business processes, information systems, and technologies. These efforts are closely related, on the one hand, and are reflected in the tax capacity, the amount of tax revenues generated, tax collection, tax arrears, effectiveness of tax audits, and other indicators characterizing the state of taxation of the territories, on the other hand. For instance, the study by Victorova et al. (2020b) showed intersections in Russian regions’ clustering based on digital and tax parameters. In this case, digitalization affects the tax system, on the one hand, (Ivanova and Selentyeva, 2018), and the tax system itself undergoes digitalization, on the other hand (Sabitova and Khafizova, 2015). Technological procedures are the focus of attention both within the framework of supranational tax regulation (Bradbury and O’Reilly, 2018) and national tax systems (Petersone and Ketners, 2017). The difference in the level of development of the IT component is largely due to the corresponding attractiveness of the territory, the level of investment (Saksonova, 2014; Sinenko and Mayburov, 2019), and the state policy for the development of innovation clusters (Selentyeva et al., 2018).

The COVID-19 pandemic has been a significant challenge to the sustainable development of the territories (Belov, 2021; Pinskaya et al., 2021). However, the need to mitigate its manifestation and create barriers to its spread has stimulated IT development, which in turn may provide an additional foothold for overcoming its long-term effects.

A review of the scientific literature showed that there is not enough research devoted to a comprehensive study of the relationship between the IT component of a territory and its tax potential. Inter alia, this is relevant in relation to the regions of the Russian Federation. Although assessment of such a relationship may not only be scientific in nature but also the applied one, as it can be in demand in the development of state and regional policies.

Hence, the purpose of this study is to develop and test a methodology for assessing the level of digitalization of the Russian regions and its relationship with the tax potential of such territories.

The hypothesis of this study is that regions that are successful in digital development have achieved it due to the fact that they have a greater tax potential than regions lagging behind in the use of IT, since they are able to:· 

  • Generate a larger amount of tax revenues, thereby ensuring the growth of gross regional product; 
  • Carry out tax control more successfully, accumulating additional funds in the budget system of the Russian Federation.


The study largely confirmed the hypothesis that had been put forward. The level of development of the region’s economy, its gross regional product, and tax potential create the basis for the digital development of a constituent entity of the Russian Federation. Significant tax revenues per capita are the key to success of the territories in the IT sphere, which confirms the first part of the hypothesis. The second part of the hypothesis has not received a clear confirmation, so it needs to be tested in dynamics over a longer time interval.

Summing up the study, we can draw the following conclusions.

The level of society informatization should be assessed not only on the basis of data on development of the telecommunications infrastructure, but efforts aimed at creating and introducing innovations should also be taken into account.

The study may be continued in the future in terms of expanding the time horizons and indicators used.

The experience of assessing the link between the IT and tax component of Russian regions may be extrapolated to other countries with the federal structure.

Despite the fact that the existing statistical compilations represent a large collection of open datasets of the Russian Federation, they contain “raw data” that need to be processed. The number of observations is not enough. Therefore, it is necessary to use proven methods and models when working with short rows, e.g., with autoregressive integrated moving average (ARIMA) models, in the long run.


    The research is partially funded by the Ministry of Science and Higher Education of the Russian Federation under the strategic academic leadership program “Priority 2030” (Agreement 075-15-2021-1333 dated 30.09.2021).


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