Methods for Assessing The Tax Potential of a Region

Abstract

In the context of globalization and economic competition, ensuring the financial independence of local budgets is increasingly dependent on accurately assessing the tax potential of regions. Existing methods for evaluating tax potential often rely on generalized indicators, which inadequately reflect the diverse economic capacities of different regions, highlighting the need for updated analytical approaches. Despite significant attention to tax potential in economic literature, comprehensive models incorporating statistical and sector-specific analyses tailored to regional conditions remain underdeveloped, especially within Uzbekistan’s fiscal framework. This study aims to review, classify, and critically evaluate contemporary methods for assessing regional tax potential, offering practical recommendations for enhancing fiscal policy planning. The findings indicate that methods such as the Representative Tax System, regression models, Kalman filtering, and stochastic frontier analysis provide valuable insights, but each has limitations in addressing informal economic activities and regional disparities. By synthesizing international methodologies with regional-specific challenges, the research underscores the necessity of a systemic, hybrid model that integrates both analytical and statistical approaches for a more precise assessment of tax potential. Strengthening the methodologies for tax potential assessment will improve budget revenue forecasting, support equitable fiscal policy development, and contribute to the sustainable economic growth of regions through informed decision-making.