• ACI Russia

08/05/1998 15:08:27 FOCUS-Russia PM urges Duma to hold special session

By Gareth Jones

MOSCOW, Aug 5 (Reuters) - Prime Minister Sergei Kiriyenko urged the

Communist-dominated lower house of parliament on Wednesday to interrupt its

summer recess to debate more laws aimed at pulling Russia out of its deep

economic crisis.

The Communist speaker of the State Duma, Gennady Seleznyov, told reporters

after his talks with Kiriyenko that the chamber would probably reconvene on

August 19 to 20.

The Duma is not due to hold its next regular session until September 21 but

Kiriyenko needs parliamentary backing to push through income tax reforms, a new

bankruptcy plan and other changes to help keep his anti-crisis programme on


The government and President Boris Yeltsin have introduced some anti-crisis

measures by decree but under the post-Soviet constitution only parliament can

change or impose taxes.

In a move intended to bolster Kiriyenko's three-month-old government, the

World Bank said on Tuesday it was likely to approve a $1.5 billion loan to

Russia later this week.

The loan is part of an overall $22.5 billion bailout package agreed by the

International Monetary Fund and Kiriyenko's team last month. The package hinges

on progress in implementing the socially painful anti-crisis programme.

Also on a guardedly optimistic note, the State Tax Service said it expected

to collect 12.5 billion roubles ($2 billion) in taxes in August, modestly up

from 12 billion in July.

Russia's poor tax collection is at the centre of its non-payments crisis.

The government can not pay its bills. Firms can not pay the government, or each

other, or their employees, many of whom have not received wages in months.

Kiriyenko, 36, drove home the message that taxes must be paid in an

interview for the popular daily Moskovsky Komsomolets published on Wednesday.

But he also conceded that Russia's complex and cumbersome fiscal system had

encouraged rampant tax dodging, especially among the newly emerging class of


"We have to be sensible. Tax rates that are too high are pointless, because

we force people to find ways to avoid them. And there are plenty of methods to

do so. The tax rates have to be reasonable, so that it isn't worth the risk,"

Kiriyenko said.

"I got into a fight with Gazprom <GAZPq.L>," he said, referring to Russia's

biggest firm and the world's largest producer of natural gas.

"The result has just come out: Gazprom has fully paid its taxes for July,

and the government has fully paid up for its current use of gas," Kiriyenko


On Wednesday, First Deputy Property Minister Alexander Braverman said

foreign investors would be allowed to take part in the planned sale of a five

percent stake in Gazprom. He said the terms of the sale would be announced by

the end of the week.

The extra cash will be most welcome for the government as it struggles to

pay off wage arrears to millions of increasingly impatient public sector


Russian companies have lost millions of dollars in recent months because

angry miners protesting against unpaid wages have imposed blockades on key

railway lines, especially in Siberia.

On Wednesday a group of miners continued to block a railway line to the main

power station on the Pacific island of Sakhalin despite the danger of a complete

electricity shutdown.

The island has had to switch to an emergency regime of 14-hour daily

blackouts, causing much of the annual peak haul of fresh salmon and caviar to

rot, unrefrigerated.

Losses from the two-week old Sakhalin blockade have already reached 1.5

billion roubles, RIA news agency reported. But local authorities said they would

not use force to remove the miners.

Several hundred miners have been picketing the government's headquarters in

Moscow for nearly two months, demanding prompt payment of their wages and

Yeltsin's resignation.

This week, however, the 67-year-old president has had something else on his

mind -- his own fishing.

On holiday with his family in the Valdai lakeland northwest of Moscow,

Yeltsin has been demonstrating his angling skills.

"On yesterday's fishing expedition Boris Yeltsin caught more perch than

anybody else. This proves he is on good physical form," Itar-Tass news agency

quoted the governor of Novgorod, Mikhail Prusak, as saying on Wednesday. He did

not say how many fish Yeltsin had caught.

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