Install

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

. Last Updated: 07/27/2016

Pochinok: Tax Take Up $3.58Bln in 1999




The federal government's tax take leapt 103 billion rubles ($3.58 billion) over target in 1999 to reach almost 340 billion rubles, or 8 percent of gross domestic product, Tax Minister Alexander Pochinok said at a news conference Wednesday.


While Pochinok trumpeted the apparent increase in the tax take of 3 percentage points of GDP and was likely to impress international lending agencies, several Western economists played down its significance.


The tax collection figures were "nothing to write home about," said Ben Slay, an economist at PlanEcon emerging markets consultancy in Washington.


Improved tax collection is critical to Russia's campaign to unlock frozen International Monetary Fund credits, and was part of the fiscal shape up prescribed by the Fund.


Pochinok also promised to crack down on corporate tax dodgers, threatening them with bankruptcy proceedings and frozen assets if they did not pay up.


But although the jump in tax collection sounded impressive, economists were left scratching their heads - not because 8 percent of GDP sounded too high, but because it sounded too low.


"God knows what Pochinok really meant," Slay said.


The minister apparently did not explain what revenues were included in the totals presented at the news conference.


But Slay and other economists said what Pochinok probably had in mind was nontax revenue, meaning the federal revenues from oil and other export tariffs were likely excluded - even though the IMF and the Russian Statistics Agency usually include them.


If those were included, Pochinok could boast of revenues amounting to 12 percent to 14 percent of GDP, said Peter Westin, a Moscow-based economist at the Russian European Center for Economic Policy. The government had set up to 11 percent of GDP as its target.


If the tax collection figures were calculated that way, they would still show growth, Slay said, citing figures for the first 10 months of 1999 that showed tax revenues up 3 percentage points as a percentage of GDP from the same period for 1998.


Westin put consolidated budget revenues - meaning those paid to municipal, regional and federal budgets - at about 30 percent of GDP, while Slay put the figure higher, at 35 percent. That is roughly equivalent to tax collection levels in the United States, they said.


While they reflected a growing economy, they also reflect inflation, Slay said.


"There are not only more goods and services being produced, but the goods and services cost more," he said. "Under pressure from the IMF and other reasons, the government is trying harder to collect taxes. But it's easier to do it when the pie is growing and [enterprises] are not using barter ... to pay their bills."