Author`s name Olga Savka

Russian Government Promises To Cancel Controlling People’s Spending

Governmental officials said that it would be a wonderful present

As it is well known, laws, state machine and law-enforcement bodies of any country serve for the interests of the ruling class. One may pass any fair laws, but if they do not protect the interests of the ruling class, there may not be any doubts that they will remain nothing but paper. Vice versa, any unfair, fiscal and discriminating laws will be rather efficient, if they are good for the ruling class. This is exactly what happens both in the “enlightened” countries of the West and in Russia. There are a lot of things to prove that. For example, the Russian government attempted to introduce the currency purchase tax. The calculation was correct: the population has so many dollars, which means that people buy dollars somewhere. However, as it turned out, only the people of scanty means go to buy dollars, being afraid of tomorrow. Others get their dollars as their pays.

Governmental and parliamentary officials could not but know that. Yet, it would be very unpleasant for them to acknowledge the fact that a dollar circulates in Russia almost the same way as a ruble does. As a result, the government passed an inefficient law, which had to be canceled in a couple of years. The same thing happened, when the government tried to introduce the tough fiscal control over large spending. Officials waited for the inflow of that illegal money that Russians pay to buy apartments, plots of land, cars, expensive trips, and so on. They failed to get what they wanted. Fifteen or twenty percent of the Russian population, which can be referred to as the “middle class” (on the base of the European standard, of course), do not wish to have their spending controlled by officials. Since they do not wish that at all, they look for possibilities to buy all the things they want, avoiding such a thing as considerable spending. It stands the reason that the movement of those, who want to “reduce their spending” has become rather active, almost national.

As a result, the Russian Finance Ministry, the Ministry for Economic Development and Trade (they have been fighting regarding the further ease of the fiscal burden), the Revenue Ministry have finally agreed upon something. The mentioned departments are going to submit their suggestions to the session of the Russian government, which is to take place on March 13th. Liberal indulgence has been promised both to citizens and to enterprises. As it is expected, the Russian government is to approve those suggestions.

For some reason, the government believes that the cancellation of the fiscal control over expensive purchasing (it is scheduled to come into effect from January1, 2004) will become the main gift for the people of Russia. However, the fact that the government is going to give up shadowing on Russian people’s expenditure, expressively testifies to the total uselessness of that measure. The poor does not buy apartments and jeeps, while the rich always finds a way to hide from taxation.

Of course, officials prepared rather decent reasons for such a sudden change of the state fiscal policy. Yet, the main reason is obvious. The control over natural persons’ spending, which came into effect in the country in 1999, turned out to be disastrously inefficient. Each message from registering organizations regarding purchasing real estate, stocks, cars, gold bars and so on, was added with the tax of less than one ruble. Finance Ministry officials acknowledged that themselves – it is stupid to preserve the tax-addition mechanism, if spending exceeds profit.

In other words, the Russian government is not able to cope with Russian people’s spending. It decided to give a present to all Russian people instead – to leave their spending alone (until someone concocts a way to control it). There is one thing clear: the current level of people’s distrust in authorities proves that Russians will not be cheated with the government’s ruse. People keep on being cunning, just in case.

As far as the further reduction of taxes is concerned (it goes about value added tax and the joint social tax in particular), the question is still open. The Ministry for Economic Development and Trade says that it will happen in 2004-2005, while the Finance Ministry insists on 2005-2006. The government will have to consider both variants. Most likely, this discrepancy is not going to bring any good.

Kira Poznakhirko

Translated by Dmitry Sudakov