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TV-Centr channel

I Want My NTV
Battle Continues for Russia's Independent Network

May 18, 2001

Moderator: Will the low level of personal income tax compared to other countries have an impact on our budget?

Yavlinsky: No. We have a choice between other things. If all our citizens paid 50 percent, as in the Netherlands, 13 percent instead of 50 percent would have a considerable affect. However, most of our citizens do not pay anything at all, let alone 13 [percent]. It is better to have 13 per cent than nothing. That is the size of things.

Moderator: Previously the situation was very difficult, as people found very inventive ways of escaping taxes. I think that this continues today.

Yavlinsky: Of course, some people will conceal income and avoid [paying taxes]. This situation has always existed throughout the world. However, we should adopt such a rate, so that we should not be ashamed to tell someone to "pay 13 per cent and feel safe ". However, I think that it would be even better if the government allowed for personal income deductions if an individual has to pay a doctor or pay for his children's education. Do you know what this would drive us to do? It would be very interesting. For example, you come and say "last year I earned so much money, but I had to pay for the medical treatment of my parents and I paid so and spent so much money on this issue. Here is the receipt." And this amount would be deducted from the taxes you had to pay.

Moderator: I can imagine now how many fake receipts would appear. Grigory Alexeevich, can you imagine that? Everyone would come up with a receipt, showing that they had been paying for the medical treatment of their parents.

Yavlinsky: This would not happen. This receipt would serve as the grounds for a tax inspector to come to see a doctor and tax him for the money you paid him. This is called "coming out of the shadows", so that you would not pay for everything, but people taking money from you would have to pay. This might include medicine, education, the bare necessities. However, this should not include such medical cases where an individual would like to have golden teeth as a fashion accessory.

Moderator: (Laughing) Then I would look great!

Yavlinsky: Indeed. Simply this should not cover such cases: this should concern only important essential things, especially for old people We believe that it is important that the economy emerges from the black market and is legalised. The more legal enterprises we have, the more people would begin paying taxes, the lower the rates of these taxes could be and the better our lives would be.

Moderator: In your opinion why are people in our country so afraid to speak openly about their incomes, not only to the tax inspectorate, but also to a neighbour or someone else? Why are they so afraid? Why is it better to hide? Why it is better to make it secret and illegal?

Yavlinsky: I have often read and heard that our people are envious. But I don't think like that. I think that things can be explained as follows. Far from everybody enjoys equal opportunities: some people have an opportunity to earn money, whereas other do not. The state simply does not allow them to earn, or they don't enjoy such conditions. And then individuals unable to earn money become very jealous of earners. If we could create equal starting conditions for all of them - simply the same starting conditions, the onus would be on them to earn the money - but the starting conditions should be equal, and we would have less such cases then.

Moderator: I think this may happen, because as a rule people do not earn large amounts of money honestly. How do you pay taxes on stolen cars?

Yavlinsky: I think this is really dishonest - all the things connected with drugs, arms and the slavery trade. Such things are really "black businesses" and are still very strong. All the other issue are debatable. If you sew beautiful clothes or make good pies, or are good at mending cars, then you bring [public] benefit. And the state should establish a rate of 5-10 percent for people who create goods for the public's welfare.

Moderator: ...And calmly make pies...

Yavlinsky: And calmly make pies, sew clothes and make useful things.

Moderator: My final question is not connected with taxes, although they could be included indirectly... What do you think of the work of PR people, i.e. the people who display the work of the tax service, for example... Simply recollect, ten or even five years ago - who could hear of this? The word "taxes" was obscure to everyone, not only schoolchildren and students. Now everyone knows about this issue, everyone comes out of the shadow and everyone knows that we have a low rate of personal income tax. Do you think that such work is really necessary?

Yavlinsky: Yes it certainly is. Such work is needed to help people gain a better understanding, because there is a reverse side of taxes. You want the police to do good work, you want to have good roads. You pay taxes and you don't want the army to be simply a motley gathering of individuals: you want an army that can really defend you. You pay taxes and you want the Federal Security Service to be able to save you from explosions. This is the other side.

Moderator: And when I pay I am sure that they also owe me something..

Yavlinsky: Yes. And if you pay for this, and you are always mocked, you would not want to pay even 13 percent. That is why the PR people, as you call them, should not only place advertisements on the need to pay taxes should be paid, but also explain to the people what is actually being done with their tax payments, for example, to run the municipal economy. They should be informed that the bureaucrats live on their taxes. Then when these bureaucrats write to say that you may come to see them only once a month from 6 a.m. to 8 a.m. to register somewhere, adding that they are "busy" all the other time, they should be reminded that their survival is dependent on your taxes. This is the main issue.

Moderator: I shall remember this.

Yavlinsky: Please do.

May 18, 2001

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