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Putin Aims To Please With 'Oligarch' Windfall Tax

by Tatiana Smolenskaya,, Moscow

15 February 2012

To stem falling support in the run up to presidential elections, Russian Prime Minister and presidential candidate Vladimir Putin has suggested that Russia's wealthiest individuals should pay a windfall tax on gains made since the 1990s when state enterprises were rapidly privatized upon the dissolution of the Soviet Union.

During the presidency of Boris Yeltsin in the 1990s, the government planned to distribute national assets evenly through privatization vouchers. However, these vouchers were purchased at cut-price rates by a select few of the nation's well-connected individuals at the time, leading to the creation of a select group of super-rich owners of former state industries, now known as oligarchs.

In a speech to the Russian Chamber of Industrialists and Entrepreneurs, Putin aired the idea of a windfall tax as a way of cleansing "dishonest" past dealings, and the measure is expected to be strongly supported by the electorate, particularly at a time when Putin is contemplating potentially unpopular measures to reduce the nation's deficit.

Although Putin didn't elaborate on this idea, the tax, if adopted, would likely be a one-off payment based on the difference between the market capitalization of a company after privatization and the actual price paid for the business. Some are sceptical whether the levy is workable, however, as determining such a sum accurately is thought to be impossible.

TAGS: individuals | Russia | tax | business | fiscal policy | oil and gas

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