Privilege in the Soviet Union (Routledge Revivals) by Matthews Mervyn;

Author:Matthews, Mervyn;
Language: eng
Format: epub
ISBN: 668200
Publisher: Routledge

LONGER-TERM TAXATION POLICIES

Although the authorities were reluctant to use income tax as a means of reducing high incomes (which they had themselves favoured) in the state sector during the twenties, tax policies were, as we have seen, somewhat changeable.

The introduction of the five-year plans was accompanied by an increase in most income tax rates. In the course of 1931 and 1932 what virtually amounted to a parallel tax was established for ‘Housing and Cultural Services’ (Menz, 1960, p. 124). Initially characterised as a ‘one-off’ payment, this was soon regularised and by the mid-thirties was providing the state with roughly as much revenue as came from formal direct taxation. Rates were sharply differentiated according to occupation and income group, with workers in the state sector, employees and creative workers most favoured.

The authorities took a significant step towards protecting state workers and employees from the growing rigours of income taxation by a law of 3 April 1932. The maximum liability for workers and employees had been rising since the mid-twenties, and had reached 38 per cent for sums over 2,000 rubles a month. The new measure reduced it to 3·5 per cent of wages over 500 rubles. This was obviously tantamount to abolishing the tax altogether, and was particularly helpful for the highly paid. The change held good until 1940, and accorded with Stalin's policy of encouraging income differentiation. Heroes of the Soviet Union, holders of orders and pensioners were added to the list of the exempt, while persons who had earned awards for inventions and work rationalisation gained partial exemption.

High earners on other scales, it is true, fared less well. In 1934 self-employed writers, artists and scientists had their taxes increased to a ceiling of 20 per cent on 20,000 rubles a year, with 38 per cent on any excess. The remaining craftsmen and earners outside the state sector also came under increased pressure, and their maximum rate went up to 87 per cent of the sums in excess of 24,000 rubles.

The militarisation of the late thirties brought some rises in income tax rates, while the separate war tax, levied between 1 January 1942 and 1 January 1946, involved a 10-ruble minimum for all earners outside the armed forces, with a maximum of 225 rubles for earnings over 2,000 rubles a month. The factor of 22·5 between the extremes of this range provides fopd for thought.

Soviet taxation policies have undergone little change since the income tax law of 30 April 1943 (Tur, 1973, pp. 16ff.). This fixed the lowest rate for workers and employees at 2 per cent for incomes over 260 rubles a month, with a maximum of 13 per cent at 1,000 rubles or more. The Housing and Cultural Services tax was abolished as a separate entity and included in the new rates. Since the reintroduction of state minimum wages in the mid-fifties, appropriate changes have been made at the lower end of the scale; but the 13 per cent maximum has been firmly retained, with all the attendant advantages for high earners.

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