MOSCOW, August 12 (RIA Novosti commentator Peter Lavelle). Finance Minister Alexei Kudrin said Thursday that he planned to submit draft legislation on a capital amnesty to the Duma, with the amnesty becoming effective from January next year and remaining in place for six months. Individuals willing to pay tax on previously undeclared income may be levied with a rate of just 7%, which is 6% below the previously discussed rate. Energy Minister Viktor Khristenko also suggested that the capital amnesty be broadened to include not only money, but also property.
The decision to lower the tax to 7% is certainly an added incentive for citizens to claim past income, but improving the overall business and investment environment would yield better results.
Tax amnesties can be effective, but the scheme Kudrin is proposing may not go far enough. For example, Kazakhstan's 2001 tax amnesty managed to attract almost $500 million (or 2.3% of GDP), but it was completely tax free. The scheme lasted only one month and then all tax records for individuals were destroyed for 1995-2000. A similar scheme for Russia, if the Kazakh example is any kind guide, could attract close to $20 billion.
