The Russians will be obliged to declare their property by themselves

The yesterday meeting of the Government had the project of the directions of the Russian tax policy for 2014 – 2016 as the main issue of the agenda. Prime Minister Dmitry Medvedev gave start to the discussion by stating a well-known fact: the country needs a stable tax system. The Chairman of the Government said: “We need a stable and efficient tax system, able to ensure budget stability in the medium-term, and preferably in the long-term, period, as well as stimulate the economic growth, business activity, facilitate the development of human potential”. After that, he demanded that the work of improving the taxation system be continued so that it would become understandable for most taxpayers and to guarantee the high quality of tax administration.

Anton Siluanov, the Minister of Finance, took the Prime Minister’s words as an order and called for obliging the citizens to inform the tax authorities of their property by themselves. A.Siluanov said: “The individual taxpayers currently pay the following property taxes: transport tax, land tax, individuals’ property tax on the basis of tax notices. Practice shows that in many cases the information on the taxable objects may be absent from the database of the tax authorities or contain errors, which brings the erroneous calculation of the taxes. Therefore, it would be reasonable to consider the matter of obliging individuals to inform the tax authorities by themselves about the taxable objects of their property”.

The Minister of Finance elaborated on his suggestion and declared that he believed it was possible to consider the issue of “tax calculation by the individuals themselves”, which means that they will also have to calculate the payments. However, A.Siluanov does not trust the taxpayers completely. In this, the Minister can be agreed with. Obviously, very few Russians are versed in tax legislation, and many of them are not too fond of mathematics. Errors in calculations cannot be excluded. A.Siluanov pointed out: “This does not mean that tax authorities must not send tax notices so that the taxpayers should pay the respective taxes”.

The Minister of Finance does not seem troubled by the fact that he wishes to encumber the common taxpayers with the problems of the bureaucratic system that is unable to create and keep updated the databases on the owners of flats and houses, automobiles and yachts, land plots and other property.

After all, one may ask: what of the acclaimed electronic government, which was supposed to be based on inter-departmental circulation of documents, enabling the public officials to exchange information instead of making the citizens run between institutions and waste their time in endless queues? If the state authorities are unable to agree on cooperation, should this become a problem of each taxpayer?

There are 40 millions of automobile owners in Russia. Add tens of millions of residential realty owners to this. According to the official data, only Moscow has approximately 4 million flats, 80% of them privatized. One may easily imagine the crowded district FTS inspectorates during the period of submitting declarations. Queues mean direct losses for the economy, which the Ministry apparently does not take into account. Queues mean corruption. Electronic government was created specifically to minimize the risk, which arises, when the citizen and the public official deal directly. But the Ministry suggests going back to the past.

Yury Efremov, advocate at “Hrenov and partners”, says that the citizen’s duty to declare property and pay the taxes on his own cannot be definitely evaluated. He supposes a sharp increase in the number of “sclerotics” – those who deliberately eschew their taxpayer’s duty to the State – will follow the implementation of A.Siluanov’s suggestions. The lawyer pointed out: “The tax officials face difficulties related to the chaos in the land cadastre and in connection with the fact that it is quite problematic to evaluate the property of individuals. The circulation of documents between institutions is virtually non-existent. Former owners of cars very often receive notices of transport tax”. Y.Efremov prognosticates negative consequences for the citizens: for fines for those who fail to inform the tax authorities on their own, queues for those who do inform, and both fines and queues for those who inform with errors.

Maxim Rovinskiy, head of the tax and customs law practice of the Law Firm "YUST", agrees: “Obliging individuals to inform of the purchase of taxable property is one thing, and making them calculate the tax is quite another. In the latter case, the rights and duties of taxpayers on one side and the powers of the tax authorities on the other are crucially redistributed. Respectively, the citizens will be responsible not only for timely and full payment of the tax on the basis of a document made by the tax authority, but also for the correctness of the tax calculation. Very few persons are capable of correct calculation of the tax, and the number of offences and fines will grow exponentially”. Concerning the information on taxable objects – if the public services function correctly, all tax authorities will receive the complete information in due time. The expert believes errors in the functioning of the state authorities are not a sufficient motive for expanding the citizens’ tax duties.

Alexey Konchin, head of practice of the Moscow Bar Association “Legis Group”, believes that the initiative of the Ministry of Finance “looks like a complete disavowing of all latest novelties in the sphere of tax administration”. The lawyer sums up: “I would say that such proposition of the Ministry of Finance means that the Ministry confesses its inability to organize a normal functioning of the Federal Tax Service, its subordinate institution. In practice, it is suggested that we the citizens, for our own money, do the job of the tax bodies. But that is precisely what we pay our taxes for: so that both the Ministry and the FTS do their direct job”.

Georgy Krupenin, partner of “Thine Solicitor” group of companies, is convinced: “Imposition of the duty to inform the tax authorities of property operations on the taxpayer will cause negative consequences”. Besides organizational inconveniences, the risk of criminal liability for individuals will increase. Also, the workload of the tax authorities will grow, which will cause the quality and promptness of their work to drop. Diana Maklozian, head of the law department of HEADS consulting company, sees the fact of uncoordinated work of tax inspectorates, Rosreestr of Russia and GIBDD as obvious, but she is unable to explain it – the data in identical databases of different institutions often differ. D.Maklozian is convinced: “One should also take into account the peculiarities of our national character, which do not include the striving to show all property to the State and pay all the taxes. Neither is there any technical base for personal notification of tax inspectorates by the citizens in such manner, nor is it completely clear how the veracity of the given information will be checked. Apparently, the check will also be done according to the existing databases of the inspectorates, which have been proving their flimsiness during the last years”.

Source: Nezavisimaya Gazeta, 31.05.2013