MOSCOW IS FEELING THE BITE OF THE CRISIS.

Yuri Luzhkov called Tuesday (October 27) for tough measures to be taken against commercial banks which owe back taxes and other payments. The Moscow mayor lashed out at the capital’s tax authorities, saying that they have not been doing their job and demanding that bankruptcy proceeding be instituted against any commercial structure which does not pay its taxes. The reason for Luzhkov’s pique: the Moscow city government was forced to admit that it faced a 10 percent budget shortfall. A report released Tuesday on the city’s financial situation said Moscow’s revenues during the first nine months of 1998 were 3.89 billion rubles (more than US$230 million at current exchange rates) below target. City authorities passed a series of emergency measures to deal with its fourth quarter budget, including cuts in some social programs and increased efforts to collect taxes. It says it is owed more than 1.2 billion rubles (some US$75 million) in back taxes. It says also that most of its problems stem from the fact that money for budget payments were frozen in commercial banks after the financial crisis hit last August.

Luzhkov declared that bankruptcy must be the punishment “for the inability to pay [what is owed] to the budget of Moscow, which provides half of the revenues to the state budget.” In calling on the State Tax Services to begin bankruptcy proceedings against the city’s largest debtors, Luzhkov apparently could not resist playing politics. He specifically named United Energy Systems (UES), the country’s electricity monopoly, and Russian Public Television (ORT) as the biggest tax deadbeats. UES is headed by Anatoly Chubais. ORT is controlled by financier Boris Berezovsky. The two are among Luzhkov’s biggest political enemies (Russian agencies, The Moscow Times, October 28).

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