…AS GOVERNMENT TAKES EMERGENCY MEASURES.

The Russian government met on May 28 to plan emergency steps to plug the 60 billion ruble (US$10 billion) gap that has appeared in the 1998 budget. The measures planned are fourfold: across the board spending cuts of 42 billion rubles, tightening tax discipline, new proposals for tax hikes and a redoubling of efforts to sell off state share holdings. (Rossiiskaya gazeta, May 29)

The Emergency Commission for Tax Discipline met on May 29 to discuss ways to squeeze more revenue out of tax debtors. The list is headed by the usual suspects–Gazprom (which owes 4.5 billion rubles), Unified Energy Systems, the Railways Ministry, AvtoVAZ. The commission decided to begin immediate bankruptcy proceedings against the Korshunov Ore Works, Ural Auto Plant and Volga Pipe Works. A similar fate awaits Tyumenenergo, Kemerovo railways and the Orsk and Udmurt oil refineries, unless they pay up within two weeks. (Radio Rossii, 30 May)

New taxes include a fourfold increase in land tax, a US$500 annual tax on slot machines, a 0.8 percent tax on bills of exchange (vekselya) and the revocation of the plan to cut one dollar per ton from oil excise duties from June of this year. The 1.2 billion ruble tax cut had originally been introduced to compensate oil companies from the 30 percent fall in the world price of oil. Many of the tax hikes are subject to approval by the State Duma, which may not be forthcoming. (TV-Center, 30 May)

The government’s hopes to raise 15 billion rubles in the next several months by selling its shares in Rosneft and Syazinvest are unrealistic. It was the March 26 failure of the auction of 75 percent of Rosneft shares, with a price tax of US$2.1 billion, which triggered the latest market collapse.

NEW TAX CODE SEEN AS CRUCIAL.