Russia gets tough with tax dodgers

The billboards around Moscow make the point as clearly as anyone can. A smooth young man in a suit glares out at the world. Like Uncle Sam, he is making a passionate appeal to the nation's patriotic impulses, although he points not with his finger but with a mobile phone. "I have submitted mine," says the logo, "Have you?"

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."

News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete tomorrow
News
Kim Jong Un gives field guidance during his inspection of the Korean People's Army (KPA) Naval Unit 167
newsSouth Korean reports suggest rumours of a coup were unfounded
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
music
Life and Style
It is believed that historically rising rates of alcohol consumption have contributed to the increase
food + drink
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
people
News
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
peopleBroadcaster has a new role bringing 'the big stories that matter' to US
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Life and Style
Moves to regulate e-cigarettes and similar products as medicines come amid increasing evidence of their effectiveness
healthHuge anti-smoking campaign kicks off on Wednesday
Life and Style
fashionEveryone, apparently
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
art
Arts and Entertainment
Shia LaBeouf is one of Brad Pitt's favourite actors in the world ever, apparently
filmsAn 'eccentric' choice, certainly
Life and Style
An Internet security expert has warned that voice recognition technology needs to be more secure
techExperts warn hackers could control our homes or spend our money simply by speaking
Extras
indybest
News
peopleBenjamin Netanyahu trolled by group promoting two-state solution
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Senior Marketing Manager - Central London - £50,000

£40000 - £50000 per annum: Ashdown Group: Marketing Manager (Campaigns, Offlin...

Head of Marketing - Acquisition & Direct Reponse Marketing

£90000 - £135000 per annum: Ashdown Group: Head of Marketing (B2C, Acquisition...

1st Line Service Desk Analyst

£27000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our client who are...

Trainee Recruitment Consultant - Birmingham - Huxley Associates

£18000 - £23000 per annum + Commission: SThree: Huxley Associates are currentl...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style