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It's tax time, and Russians plead 'Gimme Shelter'

taxes March 31, 1997
Web posted at: 9:33 p.m. EST (0233 GMT)

From Correspondent Betsy Aaron

MOSCOW (CNN) -- Monday was tax deadline day in Russia, an annual exercise in mass confusion, angst and disgust at a system that just about everyone agrees is a mess.

"It's easier to chop a huge stack of firewood than to fill in this tax declaration," said taxpayer Viktor Shamsky.


No less than Russian President Boris Yeltsin has railed against the vast country's tax code. "The existing system stifles enterprises and encourages mass tax evasion," he said.

Adding an element of the surreal to an already farcical program, the government televises clowns in public service advertisements that attempt to convince people to pay their taxes -- or else.

More Russians are filing tax returns than they used to, but that doesn't mean they are complying with the labyrinth code.

Loopholes and scams

Loopholes are big enough to drive a tank through, allowing taxpayers to devise a litany of avoidance scams.

Consider this typical ploy, as described by tax inspector Nina Golubyatnikova: "You declare $100 million rubles in income, but declare an expenditure of one billion rubles to buy an apartment. That way the state actually owes you money."

Half of business in Russia operates in the so-called shadow economy, with few records kept and no taxes paid.

Fines for failure to pay taxes are relatively small, and prison sentences for violators lenient. Little wonder, then, that businesses executives who are taxed up to 90 percent don't pay.

Honesty doesn't pay

"If you are 100 percent honest taxpayer, and you absolutely try to comply, it will probably put you out of business...," Russian American Chamber of Commerce director Peter Charow said.

But Yeltsin insists it's all going to improve. "We will streamline the system, make it fair, abolish loopholes," the Russian president said.


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