Expert fears “tax separatism” in Russian regions
The Russian government yesterday proposed to grant 100 billion RUB of compensation to the federal subjects for reduced tax revenues in 2009. That might not be enough, however, as the regions next year could get their revenues cut with as much as 800 billion RUB. An expert fears that several regions might eventually refuse to transfer taxes to Moscow in order to protect their regional economies.
The Russian federal government on Monday submitted a bill to the State Duma, according to which an additional 100 billion RUB will be transferred to the regions in 2009 in a bid to ease pain from lower tax revenues, newspaper Vedomosti reports.
The tax issue is a potentially highly sensitive issue in Russian centre-region relations, especially as the economic downturn leaves the regions with reduced spending for projects and social welfare.
Sociologist Yevgeny Gontmakher from the Institute of Contemporary Development (INSOR) believes Russian regions could face social unrest as well as “tax separatism”, newspaper Nezavisimaya Gazeta reports.
Such “tax separatism”, the refusal to hand over regional tax incomes to Moscow, would mean a return to a situation similar to the 1990s when a big number of regions had a high level of control over their regional economies. With the coming to power of Vladimir Putin in year 2000, that situation quickly changed, leaving the regional administrations with restricted possibilities for financial maneuvering.
Today, the Russian regions transfer the lion’s share of all regional taxes to Moscow.
Analyst Igor Nikolayev from the FBK company says to NG.ru that the drop in the Russian population’s incomes is likely to continue the next 2-3 years and that the country’s GDP in 2009 could fall with as much as 15 percent. He also doubts the economy will be able to recover quickly, and that a revitalization will be seen at earliest in 2011-2012.
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