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. Last Updated: 07/27/2016

State to Crack Down On Big Tax Debtors

The government is planning an "unprecedented" crackdown on major tax debtors in an effort to boost flagging revenues, top Russian officials said Tuesday.


The renewed tax collection effort comes as lawmakers gear up for a vote later this week on a series of draft laws aimed at reforming the nation's troubled tax system.


First Deputy Prime Minister Anatoly Chubais hinted Monday at "an unprecedented action plan" to boost revenues and slash spending, but gave no details, and senior government officials said Tuesday the plan would target companies with the biggest debts.


"The main emphasis will be made on work with those that are in arrears -- with the major ones," First Deputy Finance Minister Vladimir Petrov said at a news conference. "So far, this work was conducted in a sort of wave-like way. We hope that this time the wave will crest and bring with it budget revenue."


The government's Provisional Emergency Commission, created last year to squeeze funds from tax deadbeats, is expected to meet soon to force the biggest debtors to pay up, Petrov said.


The new crackdown on tax evaders comes after the International Monetary Fund last month decided to suspend payments under a $10.1 billion loan to Russia, citing chronic problems with tax collection.


The State Duma is planning to vote Thursday on some 11 draft tax laws which the government submitted last month after it became clear that passage of the proposed tax code would be delayed.


Petrov said the package of extra tax laws were key to ensuring the government meets revenue targets outlined in the draft 1998 budget, which lawmakers are scheduled to consider in a first reading also on Thursday. He said the budget would lose up to 15 trillion rubles if the additional tax bills, which remove exemptions and raise certain taxes, were not passed.


The government has collected about 52 percent of planned tax revenues for the first nine months of 1997, forcing the Finance Ministry to slash spending to keep the budget deficit in line.


Prime Minister Viktor Chernomyrdin said Tuesday the government's revenue-raising plan should be finalized over the next few days, Interfax reported. He said it would follow a recent presidential decree banning as of Jan. 1, 1998 the use of monetary offsets to pay for tax debts.


Critics have charged that the widespread use of offset schemes, which allow tax arrears to be canceled against state debts to enterprises, exacerbates the government's fiscal crisis.


The head of the State Tax Service, Alexander Pochinok, said banning monetary offsets was aimed at boosting tax payments in cash, a move that would help the government pay a massive backlog in wage arrears. He said the 10 biggest tax payers actively use offset schemes.


"We understand that it is difficult for them to search for 'live money.' Nevertheless, I expect a serious increase of cash receipts [as a result of this decree]," he told a separate news conference.


In another sign the government is stepping up tax collection efforts, Pochinok said he has proposed creation of a special tax inspectorate to monitor the capital flows of Russia's biggest companies to make sure they are paying their taxes.


Pochinok said oil companies remain the biggest tax debtors. A new scheme allowing oil companies additional pipeline space in exchange for a pledge to pay taxes regularly could turn the situation around, he said. Under the scheme, oil companies must pay up back debts by various deadlines starting Nov. 15, otherwise the pipeline space will be revoked.


More than a dozen oil companies have signed agreements with the State Tax Service and the Fuel and Energy Ministry, giving them extra pipeline space freed up after the state's oil export program was scrapped.