Will state begin to control expenses of Russians?

Will state begin to control expenses of Russians?

The Russian Ministry of Finance and the Federal Tax Service (FTS) are discussing the possibility of introducing control of large expenditures by the population, the Vedomosti newspaper reports with reference to federal officials that this is still a very rough sketch of an idea and there are no tested mechanisms yet.

The Finance Ministry spokesman said that it was not the proposal of the department. The tax department director of the Ministry of Finance, Ilya Trunin, stressed that it would be more productive to improve a poor mechanism of tax audits of individuals. However, he clarified that some of expenditure control mechanisms already exist: many civil servants and employees of state-owned companies declare their incomes, wealth and large expenses.

The Federal Tax Service (FTS) refused to comment on the proposal.

According to officials, the service already has sufficient data to conduct such monitoring. For example, a vehicle is registered, the Main Directorate for Road Traffic Safety sends information to the Federal Tax Service; and real estate purchases can be found at the Federal Service for State Registration. The FTS also can get information about bank accounts. At the same time, this data cannot be used for additional tax claims.

There are concerns that such control is unlikely to bring additional revenue to the budget, but will place an additional burden on the Federal Tax Service and the public.

The head of the Regional Banking Association, the chairman of the Duma Committee on Economic Policy, Innovation and Entrepreneurship Development, Anatoly Aksakov, speaking with a correspondent of Vestnik Kavkaza, expressed confidence that the state control over expenses would be applied only to extremele large expenses. "Obviously, it will be linked to purchases of property and luxury cars. The minimum amount for the expense to be considered ‘large’ will be determined," he said.

The deputy noted that there are all technical conditions for the control, because purchases of property and cars are registered. "At the same time, there will be an issue of assessing a real value of the property, because there will be cases when one amount of money is specified in the documents, but in reality another amount is paid. But this problem can also be solved. For example, the Russian Central Bank is creating a valuation service, which will determine a value of the collateral for a secured loan," Anatoly Aksakov believes.

The parliamentarian noted that a similar practice exists around the world, so it is likely that it will be introduced in Russia too. "First of all, it is necessary in the fight against corruption. If an official pays large sums of money to buy a property, he will have to provide documents confirming the sources for the acquisition of such property," he noted.

"Today there are millions of millionaires and thousands of billionaires in Russia, whose existence no one suspects about. Obviously, it will be a step forward in the fight against illegal income and corruption," Anatoly Aksakov concluded.

Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, in turn, stressed that a control over massive expenditures is not a problem from a technical point of view. "It could have been introduced a long time ago, since they had already made officials to report the property they own and their incomes. It is necessary to take the next step, as every civilized country did: to introduce mechanism that would confirm financial sources [of the officials] to buy property and other expensive things. There are no obstacles here. If you buy an expensive thing, you must confirm your financial source, which can be a salary, a gift or an inheritance. Then, respectively, you must pay taxes, and it is very good for the budget," he said.

"There are documents in all the countries, even a UN resolution says that the states aspiring to democracy need to control financial sources of acquisition of very expensive items. It is a normal international practice," Yuri Yudenkov recalled.