ROAR: “New atmosphere of relations between state and business”

President Dmitry Medvedev has signed into law amendments to make tax and criminal legislation milder in dealing with those who commit economic crimes and other non-violent offenders.

The amendments are seen as part of the president’s efforts to make the penal system more humane. The State Duma voted for changes in the Tax Code, Penal Code and Criminal Procedural Code and the Law on the Police on December 23, and the Federation Council approved them on December 25.

Deputies of the ruling United Russia party began to prepare the bill in the end of June. Boris Gryzlov, speaker of the State Duma and chairman of the party’s supreme council, said then that the legislation “was aimed at decriminalizing the tax sphere.”

Law enforcement agencies have criticized the document. They complained about “limitations to initiate criminal cases against those who avoid paying taxes,” Business FM radio said.

Observers stress that officials and law enforcement agencies often used the previous legislation to exert pressure on businessmen. When it is difficult to punish a businessman, “an article from the Tax Code could be found,” Sergey Shapovalov of the company Tax Assistance told Kommersant daily.

Viktor Ilyukhin, a State Duma deputy, believes the amendments were necessary, taking into account the number of economic crimes in Russia. “This law allows a man to solve his problems before court hearings,” he told the radio.

“Why should a person be harshly punished and sent to prison if… he has a possibility to pay taxes and fines?” Ilyukhin asked, adding that “enough businessmen have already been sentenced.”

At the same time, the deputy does not rule out that “Russians may take the liberalization of legislation as an opportunity to not pay taxes.” But if this is the case, deputies “will correct the present legislation,’ the added.

Vladimir Buev, vice president of the National Institute of System Studies of the Problems of Entrepreneurship agrees that economic crimes “should be punished by fines and confiscation of property.” According to Buev, small businesses do not pay taxes “for 30% of their turnover.” At the same time, one should take into account that “tax legislation in Russia is so cloudy that the chances of making a mistake while counting taxes are great,” he told the radio.

Director of the Institute of Economics at the Russian Academy of Sciences, Ruslan Grinberg, described the amendments as “a correct measure” that “they reflect public interests.”“After all, our business is only growing despite the fact that it is still imperfect,” he told Ekho Moskvy radio. And this is a law that “defends business,” he added.

One should not cherish an illusion that “a new life will start” with these amendments, Grinberg said. “But it is a step in the right direction,” he added. The fact that now those found guilty of tax evasion are not put in prison at the stage of preliminary investigation will not reduce budget revenues, Grinberg said.

On the contrary, the revenues will increase because the amendments “make both the state and business more responsible,” he said. I think that there are “more serious reasons” why the state does not receive taxes in full, he said.

Grinberg added that the law was “a victory for common sense,” but noted that he did not expect any serious changes in the state’s policy towards business.

However, Boris Titov, chairman of the Business Russia public movement, told the Vesti TV channel that the amendments may “reduce administrative and corruption pressure” on business.

“In the present situation, nobody is certain if he can do business because, unfortunately, the prosecution that could be initiated according to [tax evasion articles of the Criminal Code] is not always fair,” Titov said. “Business has taken these new measures very positively,” he added.

“Businessmen often get into situations when they cannot pay taxes in time or in full,” Titov said. “Problems become more acute in times of crisis,” he said. “Now many enterprises face the choice of paying salaries or taxes or going bankrupt,” he added. So, the new law is “a very big step forward,” he said.

Mikhail Emelyanov, a Duma deputy from the Fair Russia party, noted that law enforcement agencies “spearhead the administrative pressure on business.” The opportunity for those who are found guilty of tax evasion for the first time just to pay fines “might reduce this pressure,” he told Vzglyad online newspaper.

The faction of the Liberal Democratic Party in the parliament also supported the amendments “despite all their shortcomings.” But Deputy Sergey Ivanov told Vzglyad that it would be better to simplify the tax legislation and remove a number of taxes rather than to “make criteria for economic crimes milder.”

Meanwhile, many Communist party members did not vote for the amendments. Anatoly Golod, a member of the party’s faction, stressed that “the law is aiming at defending interests of big business.” “Statistics show that small and medium-sized entrepreneurs suffer less than big ones from the present laws in the tax sphere,” he told the paper.

However, Titov, who represents businessmen, is certain that the law will help in fighting corruption because officials used the previous legislation “to turn life into a nightmare” for businessmen. Now it will be “more difficult for officials to take bribes,” Titov told Vzglyad.

The next step may be “a real tax amnesty which may help businessmen to look at the future without fear,” Titov added.

The amendments just signed by the president are already “a change in the atmosphere of relations between the state and business,” said Andrey Makarov, deputy of the State Duma from United Party.

“Now it is declared that the state and business are partners, but the state speaks about it from a position of strength,” Makarov said. “The aim is not to put a taxpayer into prison, but make people to pay legally established taxes,” Makarov said.

Sergey Borisov, RT