Publication: Monitor Volume: 3 Issue: 50

Although the 23 trillion rubles in tax receipts received by the Russian government during January and February 1997 were well above the corresponding monthly collection figures for late 1996, recently released data show that fiscal arrears during 1996 increased by a factor of 2.26, to 128.2 trillion rubles. (Delovoi mir, February 10) Three quarters of these arrears resulted from nonpayments by enterprises. According to Valery Pavlov, first deputy director of the State Tax Service, only 16 percent of Russia’s taxpayers were not in debt to the budget at the end of 1996. Another 50 percent were "problem" taxpayers, and the rest were "dead" — i.e., they did not pay taxes at all. Furthermore, although local tax bodies in 1996 issued 20,000 collection orders worth 87.9 trillion rubles and $8.9 million for the assets belonging to 73 enterprises, these orders yielded only 21 trillion rubles for the state budget.

These data show that large, politically influential firms lie at the heart of Russia’s tax problems. For example, three of Russia’s seven largest tax deadbeats –Norilskgazprom, Uraltransgaz, and Volgotransgaz — are subsidiaries of the Gazprom natural gas monopoly, which in 1995 reported (unaudited) profits of $17.1 billion on sales of $27 billion. However, while poor fiscal discipline is partly responsible for these collection difficulties, matters are further complicated by arrears owed to these companies by their customers. At the end of 1996, for example, only 7 percent of retail natural gas purchases were being settled in full in cash.

Yeltsin Makes an Example of Udmurtia’s Authoritarian Leaders.