Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

No. 237
December 27, 2001
[translation from RIA Novosti for personal use only]
Prominent Russian economists comment on the three most important events of the year 2001. These events are listed below.

1) A 13-percent income tax was introduced in this country starting with 2001. Consequently, the federal budget has received substantial tax proceeds (197 billion roubles) from private individuals over the January-November 2001 period, a 50-percent increase on the 2000 period.

2) In his state-of-the-nation address, President Vladimir Putin of the Russian Federation noted that Russia was determined to join the WTO as soon as possible. Putin repeated this statement during the world economic forum in Moscow.

3) Record-breaking grain harvests were collected this year. According to Deputy Prime Minister Alexei Gordeyev, this enables Russia to sell 5 million tons of grain elsewhere.

Nikolai SHMELEV, director, Institute of Europe, corresponding member of the Russian Academy of Sciences, comments on the first event:

Not a single Old World country can boast a 13-percent income tax. Moreover, European income-tax levels are much higher. That's why this decision has revolutionized the tax sphere. The budget now gets more impressive tax proceeds; this highlights the correctness of current tax policies. However, low taxes have more important long-term, rather than short-term, economic implications. Low taxes will make it possible to scale down the black market economy, as well as illicit payments. Mind you, the black market economy is seen as one of the causes of our economic crisis. First of all, the black market economy doesn't channel any money into the federal treasury. Second, its enterprises charge knock-out prices for their products, thus undermining legal and law-abiding enterprises.

We've got to continue this policy. In other words, we must drastically cut taxes, e.g. profit tax in the first place. True, this also depends on global oil prices. Russian authorities would manage to cut taxes still further, provided that a barrel of oil costs at least $15-16.

Tatiana KORYAGINA, D. Sc. (Econ.), full member of the Russian Academy of Sciences, comments on the second event:

The departing year was marked by fast-paced WTO-membership talks, which were launched on the President's initiative. The President has apparently analyzed the rather contradictory consequences of this decision.

It's high time Russia started asserting itself on international markets. According to some estimates, Russia annually loses some $1-1.5 billion as a result of discriminatory measures. On the other hand, though, we'll have to remove all trade barriers, admitting foreign companies all the same. All negative consequences should be studied well in advance because our agricultural sector and light industry would fall prey to foreign competition. This is very important.

We still have time to prepare for WTO membership. Vladimir Putin has said that Russia intends to join the WTO on a par with other countries, and that any double-dealing schemes are out of the question. This position entails a rather long process of talks. Quite possibly, the WTO might invite Russia in line with some simplified plan. However, this would then highlight some serious intra-WTO geo-strategic considerations, rather than any friendly attitude toward Russia. At any rate, our movement in the direction of the WTO is quite useful. For instance, the FATF (Financial Action Task Force) might well strike Russia off its black list next year. Russia would no longer be perceived as a state, which doesn't fight money-laundering operations. We even boast our own financial intelligence service.

Yelena TYURINA, general director of the Agrarian Marketing Institute, comments on the third event:

Eighty six million tons of grain have been collected, a 33-percent increase on the 2000 period. No grain deficit is in sight. Bread prices won't soar, if fuel-and-energy prices don't skyrocket. I'm really glad because less substantial amounts of grain are currently being concealed. 12-15 percent of all grain harvests were concealed last year; concealed harvests now account for not more than 5 percent of the grand total. This can be explained by the fact that private investors, who are now beginning to subsidize the agricultural sector, demand transparency.

Impressive harvests have enabled our authorities to say that Russia's status as a leading grain exporter must be reinstated. We can accomplish this task by increasing the throughput capacity of sea-port grain elevators. Right now, this country has just three grain elevators in Novorossiisk, Tuapse and St. Petersburg with an annual throughput capacity of not more than 5 million tons. However, we could export 10 million tons of grain at this stage.

Mideastern and South-West Asian countries are seen as our main clients. Russia used to export its grain to Trans-Caucasia not so long ago; however, that market is now being invaded by Kazakhstan rather actively. Therefore we better hurry. The global market doesn't like all those, who are falling behind. At present CIS countries and former socialist countries are beginning to compete with each other quite actively.

Transcript by Yelena VLADIMIROVA.

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