Few Russians File 1999 Tax Returns

MOSCOW (AP) â€” Only a small fraction of Russians filed tax returns for 1999, and many of them likely fudged their declarations to underreport income, tax officials said Friday. <br><br>Russians are among

Friday, May 5th 2000, 12:00 am

By: News On 6

MOSCOW (AP) â€” Only a small fraction of Russians filed tax returns for 1999, and many of them likely fudged their declarations to underreport income, tax officials said Friday.

Russians are among the world's most reluctant taxpayers. The cash-strapped government's attempt to wrench out a few more rubles every year through high taxes has backfired, causing rampant evasion, analysts said.

About 3 million of the country's 60 million workers had filed personal income declarations for 1999 by the Wednesday deadline, said Igor Koshin, director of the ministry's Personal Income Tax department.

Many Russians who work for large companies and have only one place of employment are not obliged to file declarations, because the employer does. The exact number of deadbeats was not known.

``Naturally, those who don't file voluntarily will hear from our inspectors,'' Koshin said. Despite all the evasion, the government may exceed its income tax collection target of $5.14 billion for 1999, he said.

Besides the poor turnout, up to 40 percent of those who filed were expected to have understated their incomes, Tax Minister Alexander Pochinok said.

``Unfortunately, Russians' incomes are so small that taxes collected from them amount to an insignificant sum,'' Pochinok said on Russia's ORT television. The average yearly income in Russia is now about $790.

The government expects to earn only about 13 percent of its revenues from personal income tax â€” by comparison, the United States gets 85 percent of its money from the same source. A much larger chunk of Russia's income comes from taxes on gas and oil exports and customs duties.

Evaders complain that the tax burden is too high: Russian income tax rates for 1999 ranged from 12 percent for those who earned less than $1,071 to 35 percent for annual incomes over $5,357. In addition, employers must pay a substantial payroll tax.

Critics also complain that the tax system is labyrinthine. Foreign businesses say the confusing system is a key obstacle to investment.