Publication: Monitor Volume: 4 Issue: 196

The Primakov government, like its predecessors before and after the Great October Revolution, is looking to the alcohol trade as a source of funds. State Tax Services chief Georgy Boos said yesterday that revenues from alcohol excise taxes will increase by 1.5 billion rubles, or US$100 million, during the fourth quarter of this year. Meanwhile, Primakov said he supported the idea of a temporary embargo on the import of ethyl alcohol. The idea was initiated by Trade Minister Georgy Gabun, presumably as a way of cracking down on the illegal distilling of liquor. For its part, the Federal Tax Police Service announced that enterprises producing vodka and other alcohol products had cheated the state out of 429.9 million rubles in unpaid excises and other taxes. These violations mostly involved the production of alcohol without state licensing and registration, particularly the wholesale distribution of ethyl alcohol and alcoholic drinks. The tax police said it had launched 139 criminal cases involving illegal alcohol producers. The Primakov government has announced its intention to re-assert state control over both the production and sale of alcohol (Russian agencies, October 22). Similar vows were made in the past, by then-Prime Minister Viktor Chernomyrdin and President Boris Yeltsin.

Another government initiative–to increase the export duty on oil to 10 ECU per ton–caused a huge ruckus earlier this month among Russia’s oil barons, some of whom began asking for the head of the proposal’s author, Mikhail Zadornov. The finance minister reported yesterday that the government was now considering a 5 ECU-per-ton export duty on oil exports. This would represent significant climb-down in the face of the oil barons, who reportedly unleashed their lobbyists in the corridors of various ministries and in parliament. The oil barons and their backers argue the increased export duty is unfair because they have had to cut production due to the drop in world oil prices. Zadornov and his allies argue that the oil companies–who pay their domestic expenses in rubles while making most of their profits in hard-currency earned through exports–made huge profits from the ruble’s devaluation. On Thursday, former Prime Minister Viktor Chernomyrdin, a former chief of Gazprom known for his links with the fuel-energy complex, said he opposed the 5 ECU-per-ton oil export tax (Russian agencies, October 22).