This empirical study describes the results of the tax capacity efficiency analysis with the stochastic frontier model separately for the personal income tax (PIT) and VAT for 2007–2010 in the 14 regions of Uzbekistan. Although efficiency indicators are sensitive to the exogenous variables (including dummies for the economic structure of the region and dummies to indicate crisis period of 2008–2009), the relative efficiency is stable enough under different specifications of the model. Emerging picture allows to make preliminary conclusions that efficiency of the tax capacity of the VAT is lower than that of the PIT.

It is shown that under the conditions of unchanged current fiscal and other macroeconomic policies, there are unused reserves to increase tax revenues. Additionally collected taxrevenues from VAT and personal income tax can amount to about 1,6 percentage points to GDP.

Obtained results on tax inefficiency levels indicate the presence of reserves in VAT collection (technical efficiency was low for the consumption tax) for as much as 1,5 percentage points to the GDP (or 7,2 p.p. of the total budget revenues). The estimated level of PIT inefficiency accounted for 6~13%, which may indicate the presence of reserves in favor of income tax collection growth at the minimum rate of 0,15 percentage points of GDP (or 0,6 percentage points to the total budget revenues).