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."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Personal Tax Senior

£28000 - £37000 per annum: Recruitment Genius: This is an opportunity to join ...

Recruitment Genius: Customer and Markets Development Executive

£22000 - £29000 per annum: Recruitment Genius: This company's mission is to ma...

Recruitment Genius: Guest Services Assistant

£13832 per annum: Recruitment Genius: This 5 star leisure destination on the w...

Recruitment Genius: Sales Account Manager

£20000 - £32000 per annum: Recruitment Genius: A Sales Account Manager is requ...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory