ALLOCATION OF PERSONAL INCOME TAX REVENUE TO DISTRICT AND CITY BUDGETS: A REGIONAL PANEL-DATA ECONOMETRIC STUDY
DOI:
https://doi.org/10.5281/zenodo.20792933Abstract
This article empirically evaluates, using panel-data econometric methods, the effectiveness of the
mechanism introduced by Presidential Law No. LRQ-1011 of 24 December 2024 of the Republic of Uzbekistan,
which mandates that at least 50 percent of personal income tax (PIT) revenue be channeled to district and city
budgets.
A balanced panel comprising 84 districts and 711 observations was constructed from district-level State
Tax Committee data spanning 2017–2025. Three estimators were employed: Pooled OLS, Random Effects
(RE) and Fixed Effects (FE). The identification strategy relies on first-difference (FD) analysis and pre/post
comparisons using the Welch t-test and Mann–Whitney U-test.
The FE model estimates a stable annual log-growth of 32.5 percent over 2017–2025 (β = 0.325; p <
0.001). The first-difference analysis for 2024–2025 places the mean log-change at +0.394 (approximately
+48.2 percent; t = 4.60; p < 0.001). The 2025 growth rate exceeded the pre-policy period average by +23.8
percentage points, a difference confirmed by both the Welch t-test (p = 0.011) and the Mann–Whitney U-test (p
< 0.001). Positive revenue dynamics were recorded in 81.9 percent of districts.
The empirical evidence confirms that the 2025 regulatory-budgetary reform produced a statistically
significant and geographically widespread positive effect on district-level PIT revenues. These findings validate
the practical soundness of the 50-percent allocation mechanism advanced within the dissertation
Keywords
fiscal decentralization; personal income tax; panel data; fixed effects; local budget; intergovernmental fiscal relationsReferences
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