Russia gets tough with tax dodgers
Tuesday 01 April 1997
Today is the deadline for Russians to hand in their personal income tax returns. For the nation's beleaguered treasurers it is a decisive moment, an opportunity to discover if the government has made any progress with a massive campaign to bring an end to an epidemic of tax-dodging.
The problem is one of the country's gravest economic maladies, spoiling efforts to switch to free market economics, and souring its relationship with its lenders at the International Monetary Fund. Tax experts estimate that only about half the country's personal earnings yield income tax, adding to a revenue collection crisis that has reduced budget forecasts to gibberish. The rest of the cash swirls around illegally in the large black economy.
This year, the government has gone to unprecedented lengths, bombarding the 148 million population with intimidating television advertisements. One shows a man caught in the cross-hairs of a telescopic sight. "The choice is yours," growls the announcer.
Alarming footage has been screened showing the tax police's 500-strong Swat team in action. Their equipment includes grenades, tear gas, AK47 assault rifles; mountaineers and snipers are among their ranks. True, they are normally used to pursue mafia-run businesses and other non-paying companies, rather than individuals. But that is beside the point. The cash-starved authorities are quite happy to scare the public into coming clean.
Tax gathering in Russia is no easy task. Last year - when Russia managed to raise only about two-thirds of taxes - 26 tax officials were killed and 74 wounded in the line of duty. Several dozen have had their homes burned down, and at least one was kidnapped.
The violence is a result of a running war between the tax authorities and non-paying corporations. (These owe billions: half of all Russia's overdue tax is owed by only 73 enterprises.) But it deepens the rift in a country where the federal authorities are seen as inept and corrupt.
Distrust of officialdom is a central part of the problem. In a recent survey by the Russian Marketing Research Company, 61 per cent agreed that tax evasion is not a crime. "One of the greatest sources of this in was the amount of money that the government spent on the military in Chechnya," said Peter Reinhardt, personal tax manager with Ernst & Young in Moscow.
Broadly, the top rate of income tax is 35 per cent, which kicks in for those earning above $8,500 (pounds 5,312) a year. Average wages are closer to $1,800, which is taxed at 12 per cent. VAT is at 20 per cent.
Those who lie on their tax returns, or fail to submit them, face penalties ranging from a fine which equals their tax debt, plus interest, or - for repeat offenders - a jail sentence of up to three years.
The Swat teams do not help. "They tend to come through the front door and put a revolver up the receptionist's left nostril, no matter what kind of business they are dealing with," said one Western analyst. "It's not very nice."
- 1 Frank Lampard's face drops when Holly Willoughby introduces him as a 'Man City legend'
- 2 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 The Visit: Trailer for M Night Shyamalan's latest horror film is terrifying
- 5 9/11: Iranian General accuses US of organising September 11 terror attacks
General Election 2015: Tories sack candidate who said she would never support 'the Jew' Ed Miliband
9/11: Iranian General accuses US of organising September 11 terror attacks
General Election 2015: Stephen Hawking says he will vote Labour
Manny Pacquiao begs Indonesia president to spare life of drug smuggler Mary Jane Veloso about to be executed
Yazidi sex slaves undergoing surgery to 'restore virginity' after being raped by Isis militants
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
Andrew Lloyd Webber: Phantom of the Opera writer mocked after issuing a warning about Ed Miliband and Nicola Sturgeon
General election 2015: Labour will toughen hate crimes legislation surrounding Islamophobia
HSBC review into moving headquarters from UK 'underway'
£16000 - £25000 per annum: Recruitment Genius: A Photographer/ Floor planner /...
£30000 - £40000 per annum: Ashdown Group: Front-End Developer - Guildford/Craw...
£13500 - £15000 per annum: Recruitment Genius: A Customer Service Assistant is...
£16000 - £35000 per annum: Recruitment Genius: An ambitious and motivated Sale...