Assessment of tax potential: comparative analysis of assessment methods and conclusions (using the example of East Kazakhstan region)

In the context of heightened volatility of regional public revenues, policymakers increasingly need diagnostic tools that distinguish short-term fluctuations in receipts from a territory’s underlying ability to generate tax revenues given its economic base. This paper estimates the tax capacity of East Kazakhstan Region for 2020–2024 and quantifies the gap between actual tax collections and a representative (“normal”) revenue level under comparable economic fundamentals. The study aims (1) to compute tax capacity and the associated indicators of tax effort and tax gap, and (2) to identify which aggregated tax groups account for the largest deviations between actual and potential revenues. The empirical dataset combines open administrative information from the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan (budget classification groups 1xx) with official regional socioeconomic indicators from the Bureau of National Statistics. Tax capacity is measured using two complementary approaches: a benchmark (quota-capacity) method based on a representative tax-to-GRP ratio, and a structural (base-linked) method that links major tax groups to macro proxies of tax bases (a payroll proxy, retail turnover, and GRP). The results reveal a pronounced divergence in 2024: despite growth in key macro proxies, actual tax revenues declined and tax effort dropped to 0.64–0.71, implying a tax gap of approximately KZT 132–180 billion. A decomposition shows that the gap is driven primarily by taxes on goods, works, and services (group 105) and, to a lesser extent, by personal income-related revenues (group 101). The paper’s contribution lies in a reproducible, open-data framework for subnational tax capacity assessment with structural gap decomposition. The findings can support fiscal sustainability monitoring and prioritize analytical attention to the most volatile revenue blocks, while acknowledging accounting and institutional limitations (e.g., netting effects for indirect taxes).

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