Publication: Monitor Volume: 2 Issue: 134

Tax collection is now the Russian government’s number one priority. Tax receipts dropped in the first half of this year to half their 1995 levels — from 12 percent of GDP to below 6 percent — resulting in a fall of more than $5 billion in revenue so far this year. Prime Minister Viktor Chernomyrdin told the cabinet July 5, at its first post-election meeting, that the "main task" facing the government is to find the money to finance its spending commitments, and that to do that it must find ways of collecting taxes more efficiently. (Izvestiya, July 6)

The finishing touches are being put to a new tax code that will make taxes easier to collect, reducing the number of federal and local taxes from 100 to 30. The tax base is to be widened and made more equitable by reducing taxes on businesses and investors and shifting some of the burden to individuals. Stiffer penalties for tax evasion are ready to be signed into effect by presidential decree. And, from now until the end of the year, the president has authorized the federal tax police to keep half of any additional taxes they manage to collect as a result of their own supplementary investigations. (Segodnya, June 28) The money will go to pay the operating costs of the cash-strapped department, not directly into agents’ pockets, and a similar scheme failed to work when it was tried in Uzbekistan. Even so, it appears to offer the tax police wonderful new opportunities for extortion and for cutting of private deals with enterprises and businessmen.

Big Bank Threatened with Collapse.