Chris Doss The Russia Journal ---------------------------- Argumeny I Fakty No. 18-19 May 2002, SHADOW ECONOMY BLOSSOMS IN RUSSIA [from WPS Monitoring Agency, www.wps.ru/e_index.html]
The Auditing Commission has inspected how "vodka" taxes are paid in Russia. The results are astounding: it turned out that 185 million decalitres of vodka are sold a year, while Russians drink 215 million decalitres. The disparity is the volume of "fiery water" produced underground. Another surprising thing discovered by the State Customs Committee is that over the past year Russia exported one million tons of oil less than was imported to other countries.
According to Sociological center of the Russian state service academy, over the past decade the shadow sector has quintupled, and currently it accounts for 50% of the GDP.
In Russia, the "gray business" is very hard to distinguish from legal business: any enterprise must have a "gray" component. Responding to the question "Is your enterprise currently able to work without violating laws and other regulations?" 81% of respondents answered negatively, and only 15% of business owners answered positively. Calculating its figures, the State Statistics Committee always makes adjustments for the shadow sector. How do they know how to "adjust"? Manufacturers of television sets reported to the State Statistics Committee that they sold 597,000 TV sets. It turned out that consumers bought almost 3 million TV sets: they had to increase the official figure by over five times. Another example: according to statistics, at least 70 million people work in Russia, while there are only 30 million files in the Pension Fund.
It seems the shadowy economy is unprofitable for ordinary Russians. Producers do not pay taxes, because of this there are no books in schools and no medicines in hospitals. However, head of the sociological center Vladimir Boikov thinks differently, "Shadowy sector allows the population to survive. The proceeds are extremely low, and the shadowy economy offers cheap services and goods. Besides, it provides vast opportunities for earning money. If this sector is destroyed, the life of the population will become unbearable."
According to calculations of the center, a third of spending of the Russian family passes the state budget. Moreover, the lower the income of the family is, the more spending goes to the shadow sector. Overall, the "gray" turnover in calculations of Russian families amounts to $40 billion a year, which is as much as the federal budget. According to expert assessments, in the next 10-15 years hardly anything is likely to change.