Taxation amid Crisis: Statist and Market Approaches

Yevgeny Volk / April 07, 2009

Amid a severe economic crisis Russia, along with many other nations, is facing grave difficulties in replenishing the federal budget. With the government continuing to task the government agencies in charge of the budget with ensuring maximum revenues, Federal Tax Service, the Economics Development Ministry and the Finance Ministry are coming out with various proposals for covering the budget deficit.

Federal Tax Service has been extremely anti-market in its proposals. One of the most odious is to impose a levy on all financial transactions at a fixed rate of 0.5 percent. This measure would seriously affect the interests of corporations and industries that rely heavily of supplies and middlemen and would dramatically hike production and service costs. It is unlikely to bolster budget revenues but would rather push an array of key industries away from the banking system towards shady deals. (more…)