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. Last Updated: 07/27/2016

WHAT THE PAPERS SAY: Kremlin Turns Up Tax Heat on Wealthy Russians

The Tax Service said a database is being formed that will include information about 1,000 people.

'There is money in the country, but we can't manage to collect taxes.'

Tax chief Boris Fyodorov

Alexander Pochinok's work as State Tax Service chief featured a battle with large corporate taxpayers. But because he was not tough enough, a higher power will now deal with big bankers and businessmen.

Now, with a new government and tax service leadership, the approach has changed.

It used to be that large businesses were blamed for the tax system's failings, and as recently as last week at the State Tax Service, placing the primary tax burden on private individuals was spoken of as a concept for the happy, civilized future.

But now the Cabinet of ministers is determined to focus precisely on those private individual taxpayers.

On Tuesday, tax service chief Boris Fyodorov created a special department for tax control over private individuals with large incomes. The agency was set up as part of the individual income tax division headed by Max Sokol and charged with finding individual tax evaders with large incomes. The department will concentrate its attention on 1,000 of the country's most famous people.

Fyodorov reported that "a single database is currently being formed that will include exhaustive information about the incomes, and thus the expenditures," of this category of people.

Regarding physical support for this expensive database, little has changed at the tax service. As before, it suffers from shortages in personnel, technology and, most importantly, financing. So far, Fyodorov's statement is not backed up by corresponding financial support from the government.

Sokol reported that he is confident of a quick payoff from the plan to collect taxes from private individuals. Nevertheless, he said he feels it would be more effective to collect from legal entities. "Every ruble put into tax operations with a legal entity brings a return of 17 rubles [$3], but only 7 to 9 rubles with private individuals."

Prime Minister Sergei Kiriyenko reassured wealthy citizens, saying that re-orientation of the tax burden does not mean "increased tax rates, but, on the contrary, they will come down." The focus, according to Kiriyenko, will be on "increased tax discipline."

And Fyodorov warned private individuals that "The State Tax Service recommends that all citizens immediately put their declarations in order and declare their incomes for past years -- or they will face the stiffest penalties."

Earlier, the full extent of the State Tax Service's severity "for errors in tax declaration processing" could be measured by a fine equal to five minimum wages.

Russky Telegraf, June 5

Individuals Targeted

Right after his appointment, new State Tax Service chief Boris Fyodorov announced that taxes should be paid first and foremost "by the millions of private individuals, not five to 10 businesses."

Yesterday, he clarified, saying it should not be millions, but "approximately 1,000 of the Russian state's most famous individuals."

The plan's populist reasoning has little to do with a state ruled by law: Their "total compliance with the law will guarantee the successful spread of a tax-paying culture."

The tax service has the right to decide who to check. Or the new special tax service department could also turn into a covert office for getting even with troublemakers -- from big-headed oligarchs and disgraced or opposition politicians to inconvenient journalists.

Anyway, tax inspectors could fiddle with the list of 1,000 however they felt like. Considering the confusion and changeableness of our tax laws, you can find tax peccadillos for almost anyone. Even Fyodorov himself might be at risk. If that was what somebody wanted.

Unfortunately, Fyodorov's decision may have an effect exactly opposite to the one it was designed to achieve. It is possible that the new department's first clients will be those people who this year declared large incomes. For example, someone unafraid of declaring the fantastic sum of 900 billion rubles (before denomination) as their 1997 income. They'll have to search out the rest -- and with those, they will probably have to very careful in their inquiries.

Kommersant Daily, June 4

Fyodorov Interviewed

Kommersant Daily: How do you expect your attack on famous people to open people's eyes?

Fyodorov: The situation in the country is simply amoral. In your newspaper, you have a restaurant section. Go to any of them and have a look. Even this example makes it clear that there is money in the country, but we can't manage to collect taxes.

Kommersant Daily: Since you know so well what goes on in expensive restaurants, it means that you frequent them. And, by your logic, you aren't a poor man; and without a doubt, you are famous. Will you include yourself in the first 1,000?

Fyodorov: Naturally. But I have never concealed anything. I've turned in a declaration for three years now. You can go to any registration agency and find out how much stock I have: I owned United Financial Group stock before heading the State Tax Service. I have Gazprom stock. I'll show everything I have. What's to hide?

Kommersant Daily: So the people on the list will primarily be those who have filed income tax returns ?

Fyodorov: Not so. There will also be people who objectively should have high incomes but claim to have low incomes. They are the most interesting. Do you believe that, for instance, the deputy president of a bank earns $500 a month?

Kommersant Daily, June 5

'Hot' List Holds Status

Even Boris Fyodorov himself doesn't know the names of those who will be included in the "hot 1,000." The inquiries into those with fat pockets will be done absolutely anonymously, in full accordance with the law. But for some reason, we were told to talk to [pop singer] Filipp Kirkorov for a comment.

In the future, tax computers will be able to access the data bases of the State Customs Committee, the currency export control service and the tax police.

For all intents and purposes, the wealthy will find themselves under the tax service's thumb, and all of their income and spending will be easily visible.

Answering accusations that it will be violating the standards of a state governed by the rule of law, State Tax Service representatives point out that: "This is not for dealing with undesirables. The methods for working with the selected 1,000 will not differ in the slightest from usual tax service practice. Good examples will have a positive effect on tax collection."

Along with the creation of a data base for the country's richest people, the State Tax Service has not abandoned former chief Alexander Pochinok's idea of taking aerial photographs of lots in the most prestigious Moscow suburbs along Rublyovo-Uspenskoye Shosse. The aerial photographs are supposed to help determine the income levels of those living in Rublyovka.

It may be that people will be fighting to be placed on the "hot 1,000" list; the best indicator of one's elite status might soon be to have one's name in the State Tax Service's computer data base and to have a photograph above the fireplace showing one's monetary rating.

That is, of course, if all their taxes have been paid.

Izvestia, June 5