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. Last Updated: 07/27/2016

Putin's Bills Hit First Real Obstacles

President Vladimir Putin ran into his first serious parliamentary opposition since his election when he tried Wednesday to push through plans for a shake-up of the regions and reform of the tax system.

Putin faced opposition in both the lower and upper houses of parliament over the bills, which are his first major legislative initiatives since winning election March 26.

The government achieved only partial success with its tax reform in the State Duma, the lower house, persuading deputies to approve a new 13 percent flat rate of income tax.

But it had to request a second postponement of debates on a new social charge amid strong left-wing and union opposition.

Meanwhile, the Federation Council, the upper house, held fierce debates on Putin's plans for the regions. He wants the power to oust governors, deprive them of the right to form the upper chamber and scrap their immunity from prosecution.

The Federation Council appealed to Putin to take the legislation to a special conciliation commission, which would probably include the president, prime minister and the speakers of both houses, to work out a compromise version of the bill.

The governors' also passed several amendments. Under the amendments, sitting governors deprived of the right to sit in the Federation Council would still enjoy immunity from prosecution. The governors also would be allowed to nominate their own envoys to the upper house and not have them approved by local assemblies.

Federation Council speaker Yegor Stroyev said he would meet Putin in the Kremlin. "We need to change the system but in such a way that the state is strengthened, so that the state wins," Stroyev was quoted by news agencies as saying.

The governors' objections seem to be a rearguard action since Putin is not obliged to set up the special commission.

The Federation Council's power to veto the changes is also unlikely to be of much use. The Duma, so far enthusiastically in favor of the reforms, can overturn the veto.

In earlier debates, governors had strongly criticized the bills, seen as a direct attack on their privileges and power to influence decisions on a national scale rather than just locally.

"We should express our total lack of agreement with this bill. This is a process of destruction of the state," said Vitaly Kotov, head of the regional assembly of the Vladimir region.

The regional reform is the most radical administrative change since 1993, when President Boris Yeltsin rewrote the Constitution after putting down a parliamentary revolt.

Alexander Rutskoi, head of Kursk region and one of the leaders of the 1993 uprising, said Putin's proposals would seriously reduce the powers of regional heads.

The parliamentary opposition is a novelty for the Kremlin leader. The Duma, which often gave Yeltsin a tough time, has so far easily approved two nuclear arms control pacts and Putin's choice of Mikhail Kasyanov as prime minister. The Federation Council also has obliged the new president, in particular by agreeing to dismiss Prosecutor General Yury Skuratov.

The upper house debates took place as the government was forced for a second time to ask the Duma to postpone discussion of the new social tax. The debate has been rescheduled for Friday.

Unions opposed to the scheme picketed the White House, and Deputy Prime Minister Valentina Matviyenko met union leaders before going late in the day to the Kremlin to report to Putin on the parliamentary debates.

Unions fear the social tax change would undermine social benefits. Under the proposed legislation, separate payments to the social insurance fund and medical insurance fund would be joined from 2001, and pension fund contributions also would be merged into the social tax in 2003. All money would be channeled through the Tax Ministry.

Putin's representative in the Duma, Alexander Kotenkov, said he was sure the new social tax bill would be passed.

"I think that on Friday all doubts will be removed. The government simply decided to take no risks with this law," Kotenkov said in televised comments.

The new income tax, adopted by the Duma in a second reading with a vote of 266-114, has still to go through a third and final reading before it would be submitted to the upper chamber and signed into law by the president.

The government hopes the 13 percent flat rate will curb rampant tax evasion, help to balance the 2001 budget and stimulate economic growth.

The flat rate replaces the previous scale rising from 12 percent to a top rate of 30 percent. It was broadly supported by Duma factions, although the Communists and their allies opposed it, saying it did little to help the poorest taxpayers.