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Russia: Analysis From Washington--A Tale Of Two Tax Systems

Washington, 1 October 1997(RFE/RL) - No one likes to pay taxes, but the attitudes people have toward paying them not only tell a great deal about their societies but also about the kind of governments they have and are likely to get.

In the last several weeks, the very different attitudes Americans and Russians have about assuming this burden were very much on public view.

In the U.S., several American citizens complained to a Congressional committee that the Internal Revenue Service had used extremely invasive ways to collect taxes, some of which these people owed and some of which they in fact did not.

Both because Americans traditionally object to any government heavy-handedness and because they also have one of the highest rates of voluntary compliance in the payment of taxes, both members of Congress and media commentators were outraged.

Some in both groups repeated their calls for the abolishment of the IRS. Others demanded that offending agents should be fired. And still others suggested that the Congress should exercise even more stringent oversight to prevent such abuses in the future.

In response, the acting director of the IRS suspended a number of regional supervisors. And he said that his agency would seek to introduce new barriers to prevent any repetition of the problems aired on Capitol Hill.

While many Americans remained openly skeptical that the IRS would change, virtually all of them can be counted on to file their income tax returns in the future as required and to pay what they owe.

Meanwhile, a very different picture was playing out in Russia. On Monday, the director of the Russian government's tax service adopted yet another strategy in Moscow's efforts to get Russians to pay the taxes they owe.

At a meeting with a number of Russian show business celebrities, Aleksandr Pochinok asked them to "set a good example" for the rest of Russia by paying the taxes they owe.

"Approximately six million citizens have filled out tax declarations this year," he said, and for them, "it is not without importance to know that their idols have paid their own taxes."

But in comments carried on Russian television, the celebrities responded that they lacked the funds to pay their taxes, even though many of them maintain a lavish lifestyle far beyond the possibilities of an average Russian citizen.

And one of these Russian celebrities, singer Aleksandr Malinin even suggested that the Russian government exempt people like himself from all tax burdens.

"There are not too many people in our country who could receive such an exemption," Malinin said. Probably "no more than 50 or 60."

Such a contemptuous attitude toward taxation by the new Russian rich reflects three things.

First, in today's Russia, the very wealthy are used to exploiting the state for their purposes rather than paying for its maintenance. Like the wealthy in many other countries, they assume that "only the little people" actually pay taxes.

Second, it reflects the dramatic change in the way such taxes are collected in Russia. In Soviet times, enterprises collected most income taxes directly from the paychecks of their employees. Few Russians had to file a return.

Now, under post-Soviet conditions, many more people have to file, and sending in money to the government is always harder than not having seen it in the first place.

And third, the attitudes of the new Russian rich reflect the attitudes of much of the Russian population toward their government and the way it is financed.

On the one hand, the post-Soviet Russian government has adopted so many taxes and actually enforced so few of them that few businessmen could actually pay what they really owe without bankrupting themselves.

And on the other, most Russians, again reflecting their experience in Soviet times, believe that the authorities will somehow find the money whether they pay their taxes or not.

These attitudes mean, as both the Russian government and international monetary institutions have pointed out, that Russia has a serious problem in making ends meet.

At present, and in sharp contrast to the U.S., Russia's government deficit reflects the unwillingness of people to pay their taxes and the inability of Russian officials to extract them.

Thus, the contrast. Many Americans are outraged by the actions of the government's revenue agents who have sought to extract moneys the citizens do not owe.

Many Russians though are openly contemptuous of tax collectors now begging for citizens to pay what they owe.

Neither situation is entirely satisfactory. But while the American one can be remedied by the application of law, the Russian one will require a fundamental change in cultural attitudes toward the state.