A Good First Step Toward Boosting GDP

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While financial markets roiled this week, the State Duma approved legislation that could give the economy a boost.

Deputies passed in a first reading Wednesday a raft of bills to limit the number and scope of official inspections of small and medium-size businesses.

The bills, which are backed by the Kremlin and therefore are poised to sail through both chambers of parliament, would forbid inspectors from spending a combined total of more than 70 hours per year carrying out checks on the premises of a small business. Authorities only would be able to send inspectors for a special audit of a business if its owner failed to furnish an account of his company's activities on time. If a company filed all documents on time, then authorities only would be able to conduct a comprehensive audit once every three years.

Another bill in the package would ban police from carrying out tax inspections without a request from tax authorities. Furthermore, law enforcement officers would be required to give business owners stamped photocopies of any confiscated documents.

The legislation is part of President Dmitry Medvedev's plan to fight corruption, and it should help to reduce graft if vigorously implemented. As Medvedev has famously observed, the authorities should stop "causing nightmares" for businesses.

There is probably not a single businessman in this country who has not been visited by overzealous inspectors, from agencies such as the police, tax service, sanitation department and fire department.

Keeping inspectors at bay will be of tremendous help to small business owners, many of whom could tell horror stories of businesses going bankrupt after police confiscated goods as "evidence" for an investigation or on some other questionable pretext.

As Alexander Golyshko, deputy head of the Duma's Economic Policy and Entrepreneurship Committee, observed after the first reading of the legislation Wednesday, the hope is that once the bills become law, businesses "will breath more freely" and law enforcement officials will direct their attention toward investigating serious crimes.

But, as is always the case with fighting corruption, there is no silver bullet. Above all, it remains to be seen if the legislation will be enforced. Even if inspections are curbed, the officials empowered to run checks on businesses would still find opportunities to harass owners to extract bribes. One method, employed by corrupt police officers, is to plant drugs or weapons and then demand a bribe or even the signing over of a business to avoid prosecution.

Therefore, Medvedev needs to go beyond constraining inspections in his anti-corruption drive. Official corruption needs to be tackled by firing crooked officials and motivating the honest ones with decent wages, among other things. Rooting out corruption will be an extremely difficult task. But it needs to be done to bolster the economy -- and to let business owners sleep soundly at night.