Robbed of Bigger Reserves by Capital Flight
"...“In the long term, Russia should have much more reserves, given the level of its trade surplus,” he said. “It’s important to realize that Russia is being stolen money from, by capital flight and by the fact that billionaires and millionaires outside Russia and sometimes inside Russia are able to benefit from natural resources of Russia much more than they should.”
Piketty, 44, who gave a lecture at the Higher School of Economics in Moscow, may already be preaching to the converted. The government is looking to wring greater revenue from the energy industry with a tax increase, while the Bank of Russia has set a target of about $500 billion for reserves after burning through a fifth of its holdings to prop up the ruble last year.
Taxation, De-Offshorization
Vladimir Putin, in power for 16 years as premier or president, has backed efforts to repatriate as much as $1 trillion in capital held by companies and high-ranking officials abroad as part of what he’s called the “
de-offshorization” of the economy. Putin, who introduced a 13 percent flat income tax rate in 2001, has also seen top ministers broach the subject of re-instituting a progressive tax system.
The current income levy is “relatively small” in a country with “a lot of inequality” and “far too little transparency,” Piketty said.
Inequality, Transparency
“Russia would be in a much better situation today if this reform for more transparency, progressive taxation would have been conducted before,” Piketty said. “It’s time, especially in the current crisis, to change course and to deal with inequality and transparency in a much more front-faced way.”
The debate is gaining urgency after the government allowed household finances to bear the brunt of the country’s first recession in six years, putting Russia on track for the biggest drop in consumption during Putin’s rule. This year, 21.7 million people, or about 15 percent of the population, are living beneath the subsistence level, according to the Federal Statistics Service. The crisis marks the “
first significant” increase in Russia’s poverty since the crisis in 1998-1999, according to the World Bank.
...
Cui Bono?
“We don’t even know how many tax payers with high incomes are paying the tax year after a year,” Piketty said. More detailed data will show “who’s benefiting from growth in Russia as compared to the poor, as compared to the middle class.”..."
http://www.bloomberg.com/news/artic...a-robbed-of-bigger-reserves-by-capital-flight