The North Caucasus: depressed region or provider?

In recent days the motto “Let’s stop feeding Caucasus!” was the subject of comments by President Medvedev, his plenipotentiary envoy in the NCFD Alexander Khloponin, the minister of regional development and other federal officials. The VK journalist in Dagestan, Musa Musayev, tries to find out whether this motto has economic grounds or not.

The view that the North Caucasus republics are fed by the federal center causes more and more inter-ethnic conflicts and forms a negative image of the North Caucasus. Many journalists start their articles about the North Caucasus republics from the stereotype of a high rate of subsidies.

The brightest example of exaggeration and politicization of those conflicts is the death of the Spartak fan, Yegor Sviridov, and the student, Ivan Agafonov. The idea that all disasters come from the Caucasus, which is fed by Russia, is imposed on people, who are interested why modernization has become stuck, why the economy is shaken, why the stratification of society continues. The motto “Let’s stop feeding Caucasus” is perfect for it. Some politicians even say that depressed regions have no right to autonomy and should join more prosperous regions.

Meanwhile, when they say that Dagestan’s budget is 70% subsidized by Moscow, they don’t consider the corruption turnover, from 5% up to 40% of the subsidies for various programs return to Moscow in the form of bribes. The other question is: where do Dagestan’s taxes go? A tax base exists in Dagestan and its potential is high. Many experts believe that large sums of money can go to the budget of the republic from taxes. At the moment most of them go from bribes.

20% of the republic's budget comes from the republic’s revenues. In 2007 the most profitable income item was the 13% personal income tax. Where are taxes from enterprises, small, medium-sized and major businesses? Why does Moscow take such a low rate tax from them, even though the Federal Tax Agency’s department is a federal structure?

Many even successful companies show zero or negative balance. There are minor enterprises. In the Kizilyurt district 21 deposits of construction materials are operating, many construction firms exist. Thousands of jewellers, shoe-makers, carpenters and other craftsmen are working in small businesses. A tiny amount of tax is taken from thousands of tourist traders and farmers, who export and import meat, potatoes, cabbages, apricots, peaches, apples, pears and grapes to various towns of Russia. The same situation exists in the service sector.

Production and sales of oil are hidden. Many people working in the construction business, do not pay taxes either.

Some experts think that the tax system in Dagestan relies on the clan principle. A large share of taxes from major tax-payers – Dagneft, energy companies, the Sea Port, the Airport, the Makhachkala branch of the North Caucasus Railways – goes to the federal budget. Many of the companies belong to federal enterprises and can be free from taxes in the regions.

It is absurd but true: it is more profitable to give bribes than to pay taxes. First of all, they are too high. Secondly, most of them go to the federal budget, but not to the republican or municipal ones. There is no motivation for development, only obstacles.

Musa Musayev, Makhachkala. Exclusively to VK.