Publication: Monitor Volume: 3 Issue: 121

Speaking to journalists in Moscow yesterday before his departure for the G-7 summit, Russian president Boris Yeltsin said parliament’s approval of the government’s new tax code was an "enormous victory." Earlier in the day, the Duma had conditionally adopted the draft code in the first reading. That action was met with palpable relief by government ministers, who had warned of dire consequences for the 1998 budget, now being drafted, had the Duma failed to adopt the code before recessing for the summer. The new code is intended to broaden the tax base, streamline taxation categories from 75 to 28, make the tax burden more equitable, and encourage investment by lightening the load on enterprises and increasing the scope of personal income tax.

The Duma’s Budget Committee had recommended rejection of the tax code, but parliamentarians appeared to be cowed by the Yeltsin administration’s threats to dissolve parliament if they did not give their approval. Parliamentarians may also have been impressed by the veiled threat contained in a newspaper interview published earlier in the week in which Security Council secretary Ivan Rybkin pointed out that, if the president were to dissolve the Duma, the Yeltsin-appointed Political Consultative Council would be ready and willing to step into its shoes. (Kommersant-daily, June 18) The Council, which Rybkin chairs, is made up of would-be members of parliament who failed to win seats because the parties to which they belong failed to clear the 5 percent hurdle in the 1995 general election. The Duma will have a chance to amend the tax code when it has its second reading November.

The BBC’s Angus Roxburgh, one of the foreign correspondents who attended Yeltsin’s meeting with the press yesterday, said that Yeltsin seemed vague at times and that journalists’ questions were vetted "as if the president’s aides did not trust him to think for himself." (BBC, June 19)

G-7 Summit: Hashimoto to Press Yeltsin on Territorial Dispute.