Helping the Russian government establish a new tax system is the opportunity of a lifetime for Jorge Martinez, professor of economics and associate director of Georgia State University’s School of Policy Studies. With funding from a U.S. Agency for International Development (USAID) three-year grant, Dr. Martinez heads a team of tax and economic experts advising government officials on tax policy and administration.
Dr. Martinez told GlobalFax recently that since January his team has already assisted the Duma, or Russian parliament, with 10 different tax codes. He added that he expects the economic debates in parliament to grow even livelier this fall.
Broadening the country’s tax base is critical to Russia’s successful transition to a market economy. The International Monetary Fund (IMF) has earmarked nearly $23 billion in aid for Russia. But the package is contingent on improved tax receipts, and there have been serious problems with compliance and enforcement.
There is an agreement between the government and the IMF that a number of stabilization measures will be implemented. Now the government must deliver on those measures, he said. The government’s difficulty is that it does not have a majority in the Duma and has to muster consensus support from the various factions, including the Communists.
In June, the general provisions of the tax code –articles detailing tax administration, taxpayers’ rights and obligations — were approved. Not coincidentally, the IMF approved a progress payment from the assistance package.
The Ministry of Finance is expected to ask the Duma to pass the rest of the stabilization measures required by the IMF when it meets in mid-August and then again in September.
The authorities are trying to catch up in terms of tax administration and the apparatus of enforcement, he said. It’s on the way, but it won’t happen overnight.
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