Russia and the Lack of Tax Collection
The economic crisis in Russia has become an important topic within the international political and economic world. The virtual collapse of the Russian economy has had a domino effect in terms of decreased economic stability in a number of countries, especially countries in Latin America. Now the problem Russia, the United States, and basically every major country in the world need to solve is the problem of how exactly to get the Russian economy going again to prevent not only the world economy from collapsing, but also to keep Russia from ceasing to exist. According to Daniel Treisman, in his article "Russia’s Taxing Problem," Russia’s inability to collect taxes, amongst other things, is quickly becoming "…the greatest threat to it’s economic and political stability," (Treisman, 1998). Tax collecting, a viable source of revenue needed by most countries in order to successfully run a state, almost does not exist in Russia. I plan to present in this paper that tax collecting and lack thereof is not the only problem causing this crisis, but it is a serious one. It is mainly caused by corruption and the lack of the government to successfully overcome this corruption to help save their country from economic and political disaster.
The economic system in Russia has undergone some significant changes in the last decade. (For the purpose of this paper, I am going to attempt to explain a little of what I understand to be important changes in the economy that effected tax collection). Early Russian economy was characterized by strong governmental control over the activities of enterprises. In other words, the state sought to control all aspects of society, including the economy and allocation of monies to businesses and private citizens and the fixing of prices to promote economic stability. This, however, led to the increase of "black" markets where prices were often inflated and also led to wasteful practices of resource use (Alexashenko, 2-3). The economy of Russia has taken a dramatic turn from this characterization, and has attempted to become an economy characterized by more production control by private sector enterprises with less government involvement (Alexashenko, 3-6). This gives private companies and investors more control over their monetary gains and losses and makes it easier for the rich to become richer and the poor to become poorer. It also hurts smaller businesses because they do not have the influence or control of the bigger enterprises.
The net values of Belarus imported goods and services from other countries exceeded its export of goods and service to other countries creating a large Current Account Deficit. The reason Belarus a former Soviet republic scraped the currency trading restriction is due to the fact its political leadership allowed the Belarus national currency ruble to depreciate as part of a strategy to reduce the current account deficit. The unification of the exchange rates will allow the currency market ability to function as before. The overheated economy under a loose monetary policy created this crisis and the difficulties will be overcome by abolishing the restriction on currency trading. The political promise of 50% increase in wages to the government workers have impacted with no real values other than buying foreign currency and goods. According to Arkhipov and Abelsky (2011), abolishing the currency trading restriction is necessary given the current practice of doin...
Russia's industries were beginning to develop and the number of people living in towns was increasing. These people were the urban working class of Russia and they were not as eager to accept the poor wages and conditions as the peasants were.
While most of Europe had develop strong central governments and weakened the power of the nobles, Russia had lagged behind the times and still had serfs as late as 1861. The economic development that followed the emancipation of peasants in the rest of Europe created strong industrial and tax bases in those nations. Russian monarchs had attempted some level of reforms to address this inequality for almost a century before, and were indeed on their way to “economic maturity” (32) on par with the rest of Europe. But they overextended themselves and the crushing defeats of the Russo-Japanese War in 1905 and the First World War in 1917 lost them the necessary support from their subjects and created “high prices and scarcity” which were by far “the most obvious factors in the general tension”
Mau, Vladimir. " The road to 'perestrokia': economics in the USSR and the problem of
The tsar’s changes were designed to cement his sovereign authority and expand his control of a more powerful Russia. Peter’s revolution did not affect the poor or impoverished in a positive way. By altering the relationship between the elites of Russian society and the serfs, Peter produced a larger divide among the classes. He believed that just as the landowners were obliged to service, so to the peasants were bound to the land. Peter’s tax laws expanded the number of taxable citizens; only exaggerating the existing unbalanced burden of the
In the late 19th century Russia had been notably behind Europe economically, they weren’t in possession of the modern farming technologies that could efficiently provide for a large country. As a result 90% of the Russian population were peasants (Massey, 4). The serfs lived in deep poverty; they didn’t have the appropriate apparatus to produce enough crops and most of their landlords had unbelievably high demands. In an effort to reform the economy’s recession tsar Alexander II liberated the serfs. However this created more bad for both the serfs and the nobles. In the beginning the serfs saw this is a great victory and another reason to be thankful for their tsar. But as timed pass by the peasants saw this life of liberty and freedom to be increasingly difficult. The government directly compensated the nobles, while the less desirable land was sold to the peasants at a much higher price. They monthly rent they paid the nobles was replaced with paying the state (Massey, 5). And while the population nearly doubled between 1861-1917 poverty increased not only with the peasants but with the nobles as well. Nobles found it hard to assimilate them to a new life style where they would have to trade their lavish goods with farming tools and as result many of them acquired a large amount of debt. This period signifies a time where the people of Russia opened their eyes to the deep poverty and lives of oppression they were living. This is the point where the feelings of peasants who previously worshiped the tsar turned bitter. After consistent resistance to industrialization the tsar had finally given in, aggressive approaches were put in place and railroads grew more than 15,500 miles in 1880 (Massey,6). As the Industrial production con...
Since the collapse of the Soviet Union, Russia has undergone many changes. These changes were very profound and included the drastic restructuring of both the political structure and the economy. When the Russian people became dissatisfied with the communist system, they pushed for a regime change, which resulted in the dissolution of the Soviet Union and the introduction of a democratic system. Along with these political changes came the economic change from communism to a free market system. The new system and the old system, while initially seeming like they have many differences, are similar in the corruptness and oppression of the people. Because of this, the political and economic transitions from the old system of communism to the new democratic system in Russia have not been successful.
What can be learned from these decrees about Russian social relationships and the state of the Russian economy?
The Russian Federation continues to pursue a program of dramatic economic, political and social transformation. Despite President Yeltsin's successful re-election campaign, continued economic reform remains subject to the influence of the communist controlled State Duma (the Russian parliament). Even the most optimistic scenarios envision a protracted process as Russia continues the task of fashioning a legal foundation for commerce, rationalizing the regulatory and taxation regimes with which businesses must comply, and completing the task of creating from scratch a highly effective and consistent customs administration. The duration and final outcome of this process are still uncertain. Consequently, Russia offers U.S. business both high risk, and potentially high rewards.
... Oct. 1997: 11 Goldman, Minton. Russia, The Eurasian Republics, and Central/Eastern Europe. Connecticut: McGraw-Hill, 1999. 58-60. Gustatfson, Thane, and Daniel Yergin. Russia 2010: And What It Means For the World. New York: Random House, 1993. 105-106. Holmes, Charles. "In Russia, Repression Gives Way to Corruption." The Atlanta Journal and Constitution 7 Sept. 1997: B1. Lloyd, John. "The Russian Devolution." New York Times 15 Aug 1999: A8. Remnick, David. Resurrection. New York: Random House, 1998. 108- 110, 196-199. Sukhova, Suctlana. "Head of Russian Internal Affairs Ministry Believes The Russian Mafia is a Myth." Current Digest of the Post-Soviet Press 9 Dec. 1998: 20. Tanner, Adam. "Russia's Notorious Mafia Spreads Tentacles of Crime Around the World." Christian Science Monitor 11 Jan. 1995: C2. "The Russian Mafia Means Business." Economist 4 July1998: 60.
Russia's political institutions remain comparatively weak and political power is highly centralized, particularly at the presidential level, which maintains a dominant presence. Continued government interventions, regulations and an inefficient and corrupt legal system weigh on the cost and pace of doing business in Russia. These factors seriously hinder investment, both foreign and domestic. The corruption is very high and considered one of the most important political factors in Russia, as more than half of the population feels that corruption has increased and that the efforts of the government to reduce its levels are inefficient. (See App.11) The Corruption Perceptions Index placed the country in the lower section of the list (133 of 176 countries) showing the high corruption and bureaucracy in the country. Corruption and deficiencies in the rule of law limit Russia’s FDI potential. The Human development Index of
After the communist collapse in Russia, Zakaria writes that Russia concentrated too much on a quick fix. The leaders wanted to mimic the American democracy an instituted “free and fair elections,” but they forgot about establishing a stable economy. Robert Kaplan writes in his essay, “Was Democracy Just a Moment?” that countries need to establish a stable economic system before they try to institute a political system or else that political system will fail. Specifically, Kaplan thinks that there should be a strong and large middle class in the nation before it leaders think democracy will work. Kaplan was not the only intellectual to say this; Aristotle believed that a strong middle class bred a strong society. The idea about this is that democracy cannot work if the majority of a country is poor and starving while a small minority has all the money. The poor will be too preoccupied with trying to survive than maintaining the government. Russia relied too much on its natural resources instead of trying to build a functioning economy (Zakaria, 92). Zakaria writes, “Russia’s fundamental problem is not that it is a poor country struggling to modernize, but rather that it is a rich country struggling to modernize” (92). By making the mistake of first fixing the political system before the economy, and then mismanaging its resources, Russia’s political system fell prey to corruption. Zakaria writes, “Yeltsin did little to build institutions in Russia. In fact he weakened almost all competing centers of power-the legislature, the courts, regional governors” (93). ...
Almost three thousand miles apart and in different eras two significant philosophers developed antithetical economic strategies. On one hand we have the Scottish philosopher, Adam Smith, who crafted an innovative economic blueprint during Europe’s flourishing industrial revolution. In his novel, he strongly urged for a free economy based on open competition, few government regulations, and free trade. He anticipated Europe to continue growing at an even more efficient way because less government intervention allows businesses to take full advantage of resources without limitations. On the other hand, almost a century later Russia’s Minister of Finance, Sergei Witte took a different approach to improving his country’s economy. Russia’s stagnant
The Soviet Union, which was once a world superpower in the 19th century saw itself in chaos going into the 20th century. These chaoses were marked by the new ideas brought in by the new leaders who had emerged eventually into power. Almost every aspect of the Soviet Union was crumbling at this period both politically and socially, as well as the economy. There were underlying reasons for the collapse of communism in the Soviet Union and eventually Eastern Europe. The economy is the most significant aspect of every government. The soviet economy was highly centralized with a “command economy” (p.1. fsmitha.com), which had been broken down due to its complexity and centrally controlled with corruption involved in it. A strong government needs a strong economy to maintain its power and influence, but in this case the economic planning of the Soviet Union was just not working, which had an influence in other communist nations in Eastern Europe as they declined to collapse.
The universal uniform laws of development ensured Russia would eventually share Western Europe’s socio-economic and political structure, and as proof he noted that contemporary Russia’s economy was forcing the state to play less of a role and that social groups were becoming independent.”