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THE WORLD : A Paradox in a Fog: Stablization, Russian-Style

August 13, 1995|Gregory Freidin | Gregory Freidin, chairman of the Slavic department at Stanford University, is co-author of "Russia at the Barricades: Eyewitness Accounts of the August, 1991, Coup" (M.E. Sharp Publishers). He just returned from a trip to Russia

Still, nowhere do the contradictions of the pre-election Russia manifest themselves more than in the country's system--or better, pile--of taxes. For a company or individual to operate strictly by the book would mean surrendering virtually all profits and going out of business. Add to the tax situation the proliferation of organized crime and corrupt officials who collect their own "tax"--and the climate for business would seem lethal. Yet, one need not be an economics expert to see that Moscow is a real boom town. Traffic alone, thanks largely to the increase in private automobile ownership, has been growing exponentially. With only 40% of individual income derived from salaries--15% less than a year ago--it appears that small businesses are proliferating at unprecedented rates. Conclusion: Tax evasion is a universal phenomenon.

"The people are honest; it's the tax laws that are crooked," said Alexander N. Yakovlev, the veteran of \o7 perestroika \f7 and still an influential force in the Yeltsin government. A prolific and provocative author with a keen political mind and distinctive style, he is often invited to speak abroad. "I once said to Chernomyrdin," Yakovlev said, "when I receive a speaking fee abroad, why should I pay more than 80% in taxes to the state? The state did not buy me a ticket; it did not pay me a salary to write my lectures and books. Why, then, should I give up what I earned?"

Chernomyrdin was incredulous, Yakovlev reported. At that point, the First Deputy Premier Oleg N. Soskovets walked into the room. "Is it true what Alexander Yakovlevich has been telling me?" asked Chernomyrdin. Soskovets, according to Yakovlev, blushed and answered in the affirmative. "Chernomyrdin and his party cannot go into the elections with these crazy tax laws; they will change," predicted Yakovlev.

Debates about taxation, parliamentary elections, the give-and-take between the government and the press, a skeptical public, uncensored education, opportunity and a thriving business culture are the achievements the people who made the revolution four years ago hoped to see only in the distant future. Crime, deteriorating social services, deep poverty, government corruption, the fragility of the new democratic institutions and the ease with which the state resorts to force are on the other side of the scale. The elections in December will show which weighs heavier.*

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