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. Last Updated: 07/27/2016

Railways Aim to Boost Tax Payments

The Railways Ministry is aiming to become the country's second-largest taxpayer by the end of the year, contributing $3 billion to the federal budget, Railways Minister Gennady Fadeyev said Monday.

Taxes became a major problem for the railroad sector last year, when 293 criminal cases were opened against companies within the ministry for nonpayment, Fadeyev said at a news conference.

"Today all railroads and all companies within the ministry are fully paying taxes," he said.

Fadeyev had said earlier this year that the ministry would take measures to strengthen companies' discipline in paying taxes, and he threatened to fire the heads of railroad companies that do not pay up.

The ministry owed a total of 141 billion rubles ($4.52 billion) at the beginning of 2002, but paid off 13.5 billion rubles in the first quarter, Fadeyev said.

The ministry's total debt to the federal budget and regional budgets is about 40 billion rubles. By the end of the year, the ministry is planning to pay off 96 billion rubles to the budget, making it "the second-largest taxpayer after Gazprom," Fadeyev said.

Paying off the debt is central to restructuring the railroad sector, Fadeyev said.

Under the restructuring, a 100 percent state-owned joint stock company called Russian Railways Co. is to be set up by the end of the year to run the commercial part of the ministry.

"The joint stock company must not be created until all debts are paid off, otherwise all Russian railroads will be sold off at once," Fadeyev said.

President Vladimir Putin said in his annual state of the nation address last week that the budgets of the natural monopolies -- the Railways Ministry, Unified Energy Systems and Gazprom -- must be approved by the government.

"Until now, we did not even know what was happening inside [the monopolies]," Putin said.

Fadeyev said that the government "must be fully informed about activities, first of all financial activities, of such a giant like the Railways Ministry, which has 350 billion to 400 billion rubles in revenues a year."

He said the ministry is preparing a document in which it will "fully disclose all its expenses down to a ruble."

The Railways Ministry is planning to double the volumes of passenger transportation by the summer, Fadeyev said. The ministry will add some 8,000 passenger cars and hire 24,000 new employees, mostly students, he said.

The ministry will not increase passenger tariffs for long-distance trains in 2002, Fadeyev said.