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. Last Updated: 07/27/2016

Budget Control Set, Key Tax Plan Ousted

The State Duma passed a bill Friday setting up an independent body to control the government's fulfillment of the budget, and rejected out of hand a key government tax reform plan.


Both decisions seemed to signify that legislators are determined to fight the government every inch of the way on the proposed 1995 austerity budget and then seek more control over how the budget will be implemented.


"The budget and taxes are parts of the same package," said Anatoly Gordeyev of the Communist Party faction. "Both the budget proposal and the tax proposals lead to the degradation and the folding of production, so they cannot be accepted."


The budget control bill, passed by 304 votes with no one voting against it in a rare display of unanimity, envisages the creation of a new organ, the Counting Chamber, which would answer to the parliament and have broad powers to audit government ministries and even order them to take measures aimed at better implementing the budget.


The head of the Counting Chamber can be neither a parliamentary deputy nor a government official, and the chamber's staff of auditors will be nominated in equal shares by both houses of the parliament.


If the chamber feels that government ministries are ignoring its recommendations and warnings, it can pass mandatory resolutions that the government would only be able to cancel through the courts. To come into force, the bill still needs the approval of the Federation Council and of President Boris Yeltsin. However, Duma speaker Ivan Rybkin was so sure of the bill's ultimate approval that he called on factions to hurry up and nominate candidates to the chamber.


The Duma also rejected a package of six key bills designed to boost tax revenues for the 1995 budget and reform the country's tangled taxation system, which is widely viewed as one of Russia's most formidable barriers to foreign investment.


The bills shift some of the tax burden from corporations to individuals and increase the government's control of taxation in the regions.


"Every Russian citizen must contribute to the national revenues," said Deputy Finance Minister Sergei Alexashenko, who presented the bills.


Both reformist and hardline deputies pounced on the proposal, saying it was detrimental to production and that it did nothing to improve tax collection. The government has been able to collect only 60 percent of forecast taxes so far this year.


One of the bills would raise property taxes from 2 percent to 3 percent, while slightly lowering profits taxes for enterprises.


But conservative legislators saw the proposal as aimed against formerly state-owned factories with their expensive assets and relatively low profits.


"You should try to get Russian businessmen out of kiosks and into factories, into serious production," Communist deputy Leonid Petrovsky said. "So why do you raise taxes on assets needed for serious production?"


Alexashenko replied that the tax proposal's goal was not to stimulate production but to get revenues for the budget, a claim that was condemned by the hardliners as unacceptable and by some reformers as a mean trick.


"You're trying to make law-abiding people who are already paying taxes pay more," said Oksana Dmitriyeva of the Yabloko faction.


Other tax bills were condemned by representatives of all factions, who said the bills were increasing an already untenable tax burden. Without even a first-reading vote, the bills were sent to the Duma budget committee for joint reworking with the government, which promises to change them radically.