Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Yeltsin Delays Tax Code in Duma Truce

President Boris Yeltsin secured a truce with the rebellious State Duma on Tuesday, but only at the price of sacrificing the tax code, the cornerstone of next year's budget.

Communist leader Gennady Zyuganov announced late Tuesday that his faction would drop a no-confidence vote in the government that was scheduled for Wednesday morning.

The announcement followed a day of bargaining between the Duma and the Kremlin in which the two sides reached an agreement on a list of mostly token demands submitted by the opposition.

But Yeltsin's decision to recall the tax code appeared to be a major concession and came as a complete surprise to most. The move was revealed in a letter sent by Yeltsin to Duma leaders Tuesday evening.

Russian news agencies reported that the government was exploring ways to set up negotiations with the opposition on revisions to the code, but there were no details. Even if such talks began immediately, they would be highly unlikely to produce a code acceptable to the Duma this year.

The code was the flagship of the government's new wave of economic reforms. It promised to revolutionize Russia's antiquated tax system by cutting the number of taxes from around 200 to 30. The Duma, parliament's lower house, passed the code on its first reading in June, but only after the government had threatened to dissolve the house if lawmakers blocked it.

Withdrawal of the code could mean the government's draft budget for 1998, now in first reading in the Duma, will have to be largely rewritten because revenue calculations assumed that the new tax law would be in place next year.

It was unclear whether Yeltsin had dropped the tax code as a concession to avert a no-confidence vote or simply because the government had decided the bill was flawed and stood no chance of Duma approval.

In recent weeks, the government has shown signs of bowing to the Duma's criticism of the code. The Kremlin hinted, for example, that it could be introduced in phases over several months instead of as a single package.

The small liberal Yabloko faction had made the withdrawal of the code a condition of calling off its support for the no-confidence vote. But the Communist faction and their leftist allies -- whose votes would be essential for the no-confidence motion to pass -- did not include the withdrawal of the tax code among their list of demands.Zyuganov, after a closed meeting of his faction, said he had received Yeltsin's letter in which the president said he would honor the concessions offered to the Duma. "But we trust only action," he said. "The faction took the decision to withdraw the no-confidence motion."

The no-confidence vote was scheduled to take place last week, but a last-minute telephone call from Yeltsin persuaded legislators to postpone it. If the Duma votes no confidence twice within three months, Yeltsin must either fire his prime minister or dissolve the Duma and call new parliamentary elections.

The Agrarian and Popular Rule factions, both allies of the Communist bloc, said that they would follow the Communists' lead and drop their backing for the no-confidence vote.

Zyuganov has come under fire from sections of his own party for giving in to the government, and raised voices could be heard during Tuesday's faction meeting. Party members were forbidden from speaking to journalists when they emerged.

Earlier Tuesday, Yeltsin met with leaders of the Duma's major factions in the Kremlin and appeared to have agreed to most of the demands submitted by the leftist opposition.

Legislators pressed Yeltsin to put the brakes on planned housing reform, review plans for monetary reform and sign a draft law giving the legislature greater control over the government. They also demanded regular roundtable discussions on major issues, and more air time on the two state-run national television stations.

Faction leaders expressed satisfaction with the 90-minute meeting. "The president took steps to meet practically all our demands," said Nikolai Ryzhkov, a leader of the Popular Rule faction. "After a normal dialogue has started, I think we can get a positive decision."

The first roundtable discussion, to include regional leaders, lawmakers and government representatives, is slated to take place in the Kremlin Nov. 22.

The only stumbling block was a new law tightening legislative oversight of the government. Yeltsin has refused to sign the document, though it has been passed by both houses of parliament. The president Tuesday proposed submitting the law to a special conciliation commission to find a compromise.

The 53-strong Yabloko faction was the only group that remained committed to a no-confidence vote after Tuesday's talks. Nevertheless, faction leader Grigory Yavlinsky was quoted by Ekho Moskvy radio station late Tuesday as saying that he might review his position in the light of Yeltsin's decision to withdraw the tax code.

The tax code has been roundly criticized by the Duma's influential budget committee, which argues that the document is shoddily written and would cause chaos if implemented in its current form. In a measure of the opposition to the code, a record number of amendments -- about 4,000 -- have been submitted to the documents by lawmakers and officials around the country.

Regional leaders in the Federation Council, parliament's upper house, also

have expressed concern that the law would erode their local taxing authority