We recently learned the results of another study of Russia's shadow economy, done by the Sociology Center at the Russian State Service Academy. Here are just a few of the figures it reveals.
According to the sociologists, shadow turnover (concealed from the state's fiscal agencies) in the home renovation market totals $14.5 billion a year. In comparison, the annual turnover of the LUKoil company amounts to $12-14 million. Shadow turnover in construction work and purchases of construction materials amounts to $7.7 billion a year. This is more than annual revenues of such companies as Norilsk Nickel or the Tyumen oil company (TNK).
Unbelievably enough, Russian citizens spend $700 million in cash every year on "care for children and the elderly", which is twice the cost of the war in Chechnya.
As for poor parents' spending on tutors for their children prior to university studies, the figure is $2 billion a year, twice as much as the annual turnover of the Aeroflot airline.
We could continue the list of segments of the shadow economy with figures that are no less impressive. The aggregate total in just the "branches" studied by sociologists (by no means all of the shadow economy) amounts to twice the annual federal budget. In other words, the Kremlin, the Cabinet, the parliament, and all regional governments combined manage a sum of $30 billion - whereas $50-60 billion in cash evades the budget. There is the suspicion that sociologists have failed to thoroughly study the entire shadow economy, and in reality its turnover is comparable in size to legal turnover. That is, the matter may concerns not tens but hundreds of billions of dollars.
References to the shadow economy are unlikely to surprise anyone by now. However, few people have ever thought that billions of unregistered dollars can actually radically change the perception of the political situation in Russia.
For instance, what part of the economy (and, correspondingly, of the country) does the entire gigantic state machine manage? Only the legal part? Or a certain portion of the shadow economy as well?
We are not just being ironic when we say that in the past year the executive branch (with the president's personal assistance) has achieved outstanding economic results. Income tax has been cut to 13%, the Land Code is being passed, the natural monopolies are being restructured - these are valuable, revolutionary changes. However, what does this legislative triumph have to do with the shadow economy?
Apparently, very little, and it certainly has nothing at all to do with two individual Russians who live in a town near Moscow. Maria, officially a housewife and in reality a masseuse, earns $3,000 per month, and her husband Fyodor manages a number of construction brigades and earns $5,000 per month. They are not interested in the state or its revolutionary laws.
If the Finance Ministry really thinks that these two people rushed to pay the "revolutionary" 13% income tax from January 1, 2001, it should think again. They will not pay even 1% - and not because they are so greedy. The problem is that if this family chooses to pay taxes, i.e. legalize their incomes, they will immediately lose the sources - because declaring their incomes risks creating a chain reaction leading to the real incomes of their clients.
We will highlight only two things in this connection. Firstly, in accordance with the income declarations of many Russian politicians and senior officials, their incomes doubled or trebled in 2000, whereas the average increase in real incomes was 9%. Secondly, in 2001 the Russian economy is expected to grow by at least 6%, but imported car sales will double. This paradoxical gap between official figures and the real state of affairs can only be explained by the effect of the shadow economy.
But what does all this have to do with politics? If we imagine Russia as a soccer field, then the government is playing exclusively in the penalty area. It is true that the fate of the match is decided in the penalty area, but different rules of the game apply outside it. Other players live according to other laws - and may even be playing an entirely different game. This image goes a long way toward explaining the political apathy of ordinary Russians. Certain political consultants pride themselves on this public apathy, calling it stability. That's like the Politburo of the CPSU congratulating itself on the compliance of the Soviet people, who preferred to live according to the saying: "They pretend to pay us, and we pretend to work." Now times have changed, and ordinary Russians say scornfully: "They pretend to govern us, and we pretend to respect them." It appears that this situation suits everyone - for the time being, at least. However, the time may come when someone desires to bring the people and the government together at the currency exchange centers during another financial crisis. The collision near exchange centers will in reality be a collision of legal and illegal earnings. This conflict will be won by those who manage to establish control over the shadow economy. (Translated by Andrei Bystrov)