>
>I thought that, whatever Putin might or might not be, he would at least be
>ready, willing, and able to collect taxes, though at lower rates. Why is
>the state still broke? Are the rates too low? Too much avoidance and
>evasion?
-- Me: Whoo! You're really exaggerating the power of the president! The problem is that whatever legislation Putin shoves through the Duma exists on paper only in the absence of a functioning legal system.
Tax revenues are up a lot, and the government has increased wages for public-sector employees and pensions (they're still paltry, though, which is why there are so many elderly beggars). Tax evasion in Russia is still massive however; the taxes the gov. does get come almost all from the big natural-resources exporters (Gazprom is the big one; I think Gazprom contributes something like 25% of the federal budget). The shadow economy (estimated at 50% of Russian GDP) contributes nada to the federal budget.
To the article. I think it's pretty good, but a lot of it is just Menshikov doing his thing. Keep in mind I'm not an economist:
>
>***** #12 - JRL 6594
>MOSCOW TRIBUNE
>11 December 2000
>RUSSIAN ECONOMY AT YEAR END
>Results and outlook
>By Stanislav Menshikov
>
>...Instead of pump-priming the government chose tax incentives. The two
>large reforms in this area were setting a flat tax rate on personal incomes
>and lowering the tax rate on profits. The first measure helped bring part
>of hidden incomes "out of the shadow" and helped raise tax collection but
>failed to increase total spending for personal consumption.
I'm not sure what Menshikov means by personal consumption here. I was under the impression that spending on consumer goods was at a record high.
The second measure led companies to cut
>capital investment since they could no longer deduct investment
>expenditures from profits for tax purposes. Tax collection on this item
>fell by 20 percent in 2002 because companies chose to reduce reported
>profits. The net effect on economic growth was clearly negative.
>
>New suggested reforms such as reducing the Unified Social Tax (UST) from
>37.5 to 32 percent and the Value-Added Tax (VAT) from 20 to 16 percent are
>being postponed until 2004 or 2005 for fear that they would further
>destabilise the budget.
>
>As a result, growth rates in capital investment have fallen from 17 percent
>in 2000 to 7 percent in 2001 and only 2.5 percent in 2002. They are now
>growing substantially slower than GDP. This is undermining further economic
>growth because productive capacity is stagnant, decaying and outdated. It
>is also reducing growth in aggregate demand and undermining competitive
>power of domestic industries. Weak investment is the principal Achilles'
>heel of the Russian economy....
---
Yes. The Russian economy has been characetrized as a "Soviet sandwich." This
means that a cash-flush natural-resources extraction sector and a vibrant
small-business sector (i.e. shadow economy) are sandwiched around subsidized
Soviet-era industries that employ the bulk of the work force, are heavily
subsidized and noncompetitive. Their infrastructure is degrading rapidly
(except for armaments production, which has a lotof money and is top-notch).
The trick is to get the oil and gas co's to invest in that sector, and to
get small and mid-sized business out of the shadow. Both are occuring to a
small extent, but much less than what is probably.
Q1 GDP growth in Russia was 6.5%, by the way, much better than what Menshikov or even the government predicted.
>
><http://www.cdi.org/russia/johnson/6594-12.cfm> *****
>--
>Yoshie
>
>* Calendar of Events in Columbus:
><http://www.osu.edu/students/sif/calendar.html>
>* Student International Forum: <http://www.osu.edu/students/sif/>
>* Committee for Justice in Palestine: <http://www.osudivest.org/>
>* Al-Awda-Ohio: <http://groups.yahoo.com/group/Al-Awda-Ohio>
>* Solidarity: <http://solidarity.igc.org/>
>___________________________________
>http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
_________________________________________________________________ MSN 8 with e-mail virus protection service: 2 months FREE* http://join.msn.com/?page=features/virus