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DANCES WITH
BEARS
Putin's
rebellion and the protest vote
By
John Helmer
MOSCOW - The idea of fiscal justice
- that tax should be paid in proportion to the
taxpayer's means - can produce bloody rebellions, even
revolutions, but not in Russia.
What
ex-president Boris Yeltsin did in the 1990s was a trick
that he might have cribbed from the histories of the old
regimes of France, if Yeltsin had had the
resourcefulness to read them. In his case, desperation
took the place of literacy. Until the French Revolution
of 1789 halted the practice, the French kings pursued
the idea of buying the loyalty of those powerful enough
to threaten their rule by handing out gifts of state
assets. Productive agricultural land was the most
important of these, but import concessions and commodity
monopolies were also awarded. In addition, the kings
sold titles of nobility, and in return they exempted the
titleholders from paying most of the taxes of the realm.
That's what an aristocracy is made of - the right to
exemption from tax, traded for a royal bribe, and the
promise not to take up arms against the monarch. In this
respect, all aristocrats are nothing if not petty
bourgeois, and the foundation of their fortunes, not
necessarily a crime, but certainly a tax break.
Compared to the tsars, Yeltsin democratized tax
exemption among Russians. He also favored a small elite,
which has managed to concentrate most of the cash value
of the exemptions into their own hands, while selling
off their debts. They are known as the oligarchs.
It is easy to understand that the more insecure
kings are, the more tax exemptions they dispense, at the
same time as their expenditure requirements - for armies
to protect themselves from rebellion - grow apace. The
tax base shrinks, as fewer and fewer people are obliged
to shoulder the costs of the unbalanced, crooked state.
Yeltsin's one original contribution to this long, sordid
history was his invention of the 100 percent tax on low
incomes. That was the practice, implemented by a
succession of finance ministers, of withholding wage and
salary payments to state employees on the pretence of
bureaucratic delay. By extension of the same practice to
all those owed money by the state, the tax was adopted
by private employers towards their employees.
Throughout the worst of this tax, there was only
one revolt - that of the Supreme Soviet in 1993. By
physically liquidating the parliament, and killing more
than 100 of its defenders, Yeltsin taught a generation
of potential tax rebels that it was safer to steal from
the system than to fight it.
In the history of
tax rebellions, poor people generally stay aloof. They
die in swarms, but usually from disease, not from
protest. Those who are prepared to fight for fiscal
justice - attacking either the king or his noblemen -
usually come from the small property classes, either
well-off farmers, or tradesmen, artisans and small
business owners. They aren't so poor that they don't pay
any tax. Nor are they wealthy enough to buy their way
into the exemptions of the aristocracy. So they are the
meat in the fiscal sandwich. When kings fear for their
lives, these are the people who pay for his peace of
mind. But their potential for disloyalty is always on
his mind. The development of European bureaucracy, with
all its record-keeping, inspectors, and sanctions, is
the evolution of squeezing the meat in the sandwich to
the limit.
The current conflict between
President Vladimir Putin and the oligarchs is unique
because, for the first time in Russian history, it is
the king who is trying to dismantle the tax exemptions.
He is doing that without any show of support from the
small business groups which stand to benefit most. They
are too afraid of Putin's weakness, and of the
oligarchs' vindictiveness, to take his side, at least
for now. Those who ought to be their natural
representatives, deputies of the Duma tax committee, are
hirelings of the oligarchs. Yevgeny Primakov at the
Chamber of Commerce, and Arkady Volsky at the Union of
Industrialists and Entrepreneurs, ought to speak for
them, but they don't dare to raise their voices either.
What Mikhail Khodorkovsky has done by trying to
sell a 40 percent stake of the oil company Yukos to
ExxonMobil is nothing less than cashing out the capital
gain on all the Yeltsin dispensations from which he
benefited, before next March. The timing is short and
the method desperate, because Khodorkovsky and his
fellow oligarchs are certain that Putin will introduce
the necessary taxes to redistribute the wealth in the
realm, once he is reelected after presidential elections
early next year.
Stealing is the one word which,
in the worldwide history of tax rebellion, all rebels
use more often than any other to attack this practice.
Khodorkovsky is no more than a thief trying to bank his
loot in the United States. He may count himself less
fortunate than Mikhail Fridman and Victor Vexelberg,
whose sale of Tyumen Oil Company to British Petroleum
early in the year caught Putin unawares, uncertain of
what to do ahead of the potential oil price crisis that
the Iraq war could have triggered. Oil baron Roman
Abramovich has been just as fortunate in getting his
cash out without paying tax, although the assets have
remained in Russian hands. Thieves they are, in Putin's
view, and in the opinion of most Russian voters.
This too makes for a unique alliance in the
history of tax rebellions - the king in league with the
passive poor. It is just as well that Putin has
effective command of the army and the security services,
because Putin's enemies are currently so numerous, his
allies so impotent, and the stakes so big, that he might
otherwise become a target for violence. Yeltsin
destroyed the inhibition to use violent methods in 1993.
The methods the oligarchs have used also lack this
inhibition.
Some of the oligarchs don't have the
stomach for confrontation with the Kremlin, but believe
that Putin will be satisfied with a pantomime of
concessions. Their paid propagandists in the Vedomosti
newspaper and the Moscow Times charge that all Putin is
holding out for is a slice of the tax exempt proceeds
for himself. Vladimir Potanin, who controls both
newspapers, has publicly proposed a program of raising
employee salaries; although at the same time he tried to
make sure that the employees of his Norilsk Nickel
mining company, and the voters of Norilsk city, would
not elect as their mayor the union leader who has been
agitating for just such an increase since January. On
October 25, in the first test of the popular sentiment
towards the oligarchs, Norilsk voters elected Valery
Melnikov, Potanin's bete noire. Victor Vexelberg
recently gave in to the first major strike of a group of
employees at his Siberian Ural Aluminum - while
simultaneously trying to prevent a single newspaper from
reporting the wage gains the strikers have made, in case
their example becomes infectious.
That's another
of the risks that the oligarchs are running, as the
conflict with Yukos drags on toward parliamentary
election day on December 7. The chance is growing that
Russia's poor may cotton on to what Putin is trying to
do, and find their own spontaneous ways of taking the
offensive against the oligarchs. A protest vote of this
magnitude won't show up in the preliminary polls. But if
it happens, it will signal that Russia's young
aristocracy is on its last legs.
(Copyright 2003
Asia Times Online Co, Ltd. All rights reserved. Please
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