Russians unaware of tax amnesty

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12:29 21.11.2007
text: Gazeta.kz
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More than half of all Russians (58 %) know nothing about a tax amnesty program, an opinion poll by the All-Russian Public Opinion Research Center (VTsIOM) showed, reports Analytical department of RIA RosBusinessConsulting.

Analysts see this as a sign of indifference rather than the government’s failure to explain the initiative. So far, about RUR 3.5 billion (approx. $142.9m) in previously untaxed income has been declared under the tax amnesty program.

The tax amnesty was declared in Russia on March 1, allowing individual taxpayers and self-employed entrepreneurs to declare untaxed income and pay a 13 percent tax on it, with no questions asked about the origin of income. This includes income from before 1 January 2006. This arrangement will last until January 1, 2008. The self-declared tax can be paid into the Federal Treasury’s reserve accounts in banks within the deposit insurance system. According to the Federal Treasury, RUR 3.523 billion had been declared by October 1.

The VTsIOM opinion poll revealed that 58 % were unaware about the tax amnesty, while 33 % had “heard something about it” and only 6 % said they knew enough about the program. Apparently, Russians are indifferent to the amnesty because they don’t see how it could be applied to them. Eighteen percent believe that the program targets officials who hide their incomes and property from taxation, and seventeen percent think the tax amnesty is for entrepreneurs.

Ten percent of those polled believe that the tax amnesty is primed for companies that pay their salaries under the table, and 27 % think it targets people hiding their incomes from the government. Low awareness, however, does not prevent people from doubting the success of the initiative, with 38 % not expecting any positive results and only 27 % seeing the procedure as needed.

Evsei Gurvich, head of the Economic Expert Group, says the poll results are logical. People are unaware of the tax amnesty because most of them are unaffected by it. “People who have worked for one company and for whom this company paid income tax, believe that they have paid all their taxes,” Gurvich said.

Elena Matrosova, head of the Macroeconomic Research Center at BDO Unicon, said the tax amnesty idea had already exhausted itself, as it had been discussed since the 1990s. In addition, the measure has lost its importance for a good portion of its target audience who “have long taken their money abroad, to offshore centers,” commented Matrosova, noting that it would be impossible to estimate revenue from the amnesty.

Meanwhile, Elena Kornetova, at Finexpertiza LLC, blames the public’s low awareness on the government’s failure to bring the program to people’s attention. Though few would admit to their wrongdoing, even if informed about the pardon program.