Russian Minister Lays Down The Law On Taxes

Tatiana Smolensky, Tax-news.com, Moscow

09 February 2001

In recent months, the Russian tax police have been on the case of the country's plethora of tax dodgers, bent on stamping out tax evasion and bolstering empty coffers with tax revenue as a result. The Tax Ministry did manage to increase total tax collection by one and a half times last year, but is worried that 2001 will prove much less fruitful, saying the second part of the country's new Tax Code is to blame.

However, Tax Minister Gennady Bukayev's resolve has only been strengthened. He is now saying that when people see the hot water they will be in for not coughing up, they will not be able to get their declarations in fast enough.

The problem with the new Tax Code is that although it introduced a new, unified tax for all, it meant radical changes to Russia's tax system as a whole and the Tax Ministry was unprepared for the demands placed on it by the new legislation.

Mr Bukayev, in a recent interview with the Moscow Times, admitted that the new laws were burdensome for the ministry, saying: 'Any new law must be thought out both by the taxpayer and the tax inspector, and this needs time......we are currently in the process of assimilating these innovations, and the shortcomings are revealed as part of this process....Our taxpayers are sharp. They quickly take advantage of these flaws.'

As if Mr Bukayev's determination to see all tax revenues due reach the ministry was not enough for the reluctant taxpayer, he has not ruled out tax increases. Referring to taxes on industry, he said there was plenty of scope to increase taxation: 'If an industry is producing at less than 100 per cent of its capacity, then this qualifies as room to increase its tax burden,' he told the Moscow Times, with labyrinthine Russian logic.

Russian industry in the past was one of the biggest tax dodgers but they also contribute most to the budget, so it comes as no real suprise to learn that Mr Bukayev is to keep a particularly close eye on the large companies. He said that they will be 'monitored on a day-to-day basis. If there is a sudden drop in a company's payments, the reason must be explained at once.'

When asked why Russians still conceal their income from the tax collector, Mr Bukayev said: 'Who likes the fact that the money they earn is taken away from them? As soon as people understand that they'll be in trouble, the culture emerges and they come running to us at night to submit declarations.'

He continued: 'Surely, you don't think that America has a highly developed tax culture? If an American has the opportunity not to submit a declaration, he'll do it just as soon as our taxpayers would. It's simply that every citizen there knows that he'll get in trouble and suffer significantly more. Americans fear being blacklisted - entered into a computer and being made an outcast. He will be watched and pressurized everywhere. I am certain that 90 per cent of people here are law-abiding and have no desire to fall out with the state.'

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