Friday, August 12, 2005

The thieves are offering amnesty

MosNews reported several days ago on the capital
amnesty suggestion prepared by the Finance
Ministry. Alexei Kudrin who heads the ministry
said that beginning on Jan 1, 2006, Russian
citizens will be able to transfer earlier-
concealed incomes to Russian bank accounts using
a simplified scheme. Then they will have to pay a
13 percent income tax and be free from any
punitive sanctions from the tax authorities. The
proposed amnesty would run from Jan 1 to July 1
of next year.
Though the cabinet backed the idea in principle,
ministers questioned whether the terms the
Finance Ministry had drawn up would entice much
money back. “The rate in other countries that
have carried out amnesties was significantly
lower than the actual rate of income tax in that
country,” Deputy Prime Minister Alexander Zhukov
told the meeting, calling for the amnesty rate to
be seven percent. Other ministers suggested the
amnesty should run for more than six months and
should include property as well as money. “I am
sure that those who can earn money can also
dispose of it,” said Mikhail Barshchevsky, the
government’s representative to Russia’s top
courts. “It’s hardly going to be lying about
under their pillows.”

Tax cuts during Putin’s first term in office
were a major incentive for people to declare
their income but many Russians, rich and poor,
still operate in the shadow economy. The
persecution of the Yukos oil major and its
founder Mikhail Khodorkovsky rekindled capital
flight that had showed signs of slowing. Net
private capital outflow topped $9 billion last
year and officials have said it could be equally
high this year.

Tax competition is heating up...worldwide.

There's a big auction going on in other countries
and off-shore banking centers for your money that
bummints are just now noticing.

Middle-classes everywhere are starting to jump into
these tax savings.

What do you suppose will be the result?

Full report.