A Report on Russia
[A letter sent 15 October 2001 by the Fred Harrison,
on behalf of the Centre for Land Policy Studies]
The Georgist President
VLADIMIR PUTIN continues to stress his credentials as a tax reformer.
In this year's Message of the President of the Russian Federation to
the Federal Assembly (Moscow, 2001, p.25), Putin recalled the "cardinal
tax reform" pledge in his election programme, and he firmly
Today our strategic priority is the rational and fair
taxation of natural resources - the main wealth of Russia, real
estate, and the gradual reduction of taxation of non-rental revenues
and the final abolition of taxation of turnover [sales, VAT].
It is one of the major accomplishments of our work in Russia that the
President's philosophy (for which we do not claim credit) is broadly
understood in the nation and popularly discussed in a way that is
absent in any other country (for which we do claim some of the
credit). Take as a random example the interview given by Moscow
businessman Alexander Panikin (Moskovsky Gazette, October 3),
in which he attacks government tax reforms. Progress in growth rates
counts for little if "every citizen in Russia is not able to get
his share of natural rent, which belongs to him by right", he
But ministers in the Ministry of Finance are at odds with the
President over rental policy. Take the case of the Land Tax. This
raises a paltry sum, but at least it preserves the recognition that
urban land is a distinctive source of revenue. The Ministry, according
to our informants in the Duma, is now laying the groundwork to merge
the Land Tax into a general property tax which would also fall on
buildings. The Duma Budget Committee is being lined up to persuade the
legislators to accept this change.
This proposal flies in the face of what the President says he wants
to achieve. There is an ideological conflict here which reveals a
tension in the structure of power. Who rules? The President
appoints the government, but the government is cynically jeering at
the President's most cherished policy -- his "cardinal tax
We expose the rift in thinking in the new booklet we have just
published for circulation among politicians and the media.
Provocatively, we have entitled this booklet the The Prisoner
President. We refer, of course, to Put in being an ideological
THE LAND CODE is on the verge of being ratified by the Council of
Federation (Upper House). This is a dog's dinner of a Code. The
government is right to insist on private possessory rights, which the
communist and agrarian parties have been resisting. On the other hand,
the mechanisms employed to transfer land rights out of the hands of
politicians and bureaucrats are dangerously formulated. They will do
nothing to diminish corruption.
We still have everything to fight for however, in that the key issue
is the payments for the use of land. This is the battle to be fought
when the Duma starts to thrash out the second part of the Tax Code.
Again, we have detected the influence of the Ministry of Finance
behind the pressure on civil servants to draft dubiously-worded
One of our colleagues, Dr. Sergei Glazyev (Chairman of the Duma
Economics Committee) has commissioned a study of tax policy from us
which he will circulate among his colleagues. We do not have the time
to print this study, but Clazyev says that this is not a problem: he
will use the Duma facilities to run off all the copies he needs to
reach the key players whose minds are being bent by those who wish to
pervert the course of justice.
So the fight proceeds. The opportunities for promoting our thesis
never ceases to amaze me. Take the seminar held by the Economics
Department of the Academy of Sciences just over a week ago. The
principal speaker was Metropolit Cyril, the architect of the Russian
Orthodox Church's social policy. He appealed to the scientists for
help in reviving the church so that it can fulfil its spiritual and
social obligations. I was invited to address them, which was the
chance to remind the priests that the theology of land was the motif
that ran through the Old Testament. This contains the clues to the
revival of the church and the way in which the spiritual leaders could
serve the people of Russia. Metropolit Cyril's pen did not stop as I
spoke, and he acknowledged that my offering was important for him. I
have no doubt that the working group established that day by the
priests and academicians will stress the spiritual significance of the
rent of land in the quest to renew the culture of the people of
Meanwhile, the Russian Fund on which we rely has £1,923 in it.
This is just enough for two visits to Moscow. If you believe that the
work is worth backing, please send your donation to Barbara Sobrielo.
As ever, we are grateful for your moral support.