Who Owns Russia?
|January 9, 2007||Posted by Staff under Archive, Progress Report, The Progress Report|
Who Owns Russia?
Land Reform Defeated; Russia Will Imitate West Instead
Russia appears to be throwing its natural resources open to foreign speculators. However, the below report does not clarify the biggest question of all — will private land owners be taxed? Site value taxation could free Russia from the crippling, corrupting grasp of the IMF, and would enable Russians to have no income taxes, no sales taxes, no taxes on buildings. But foreign land speculators, as soon as they arrive, will lobby to avoid paying land taxes. Will Russia become a world leader or an economic disaster?
by Kevin O’Flynn
President Vladimir Putin signed into law a code that will make it legal to own land.
The code will allow Russians and foreigners to buy commercial and residential land (farmland is currently excluded). The Kremlin says this will hasten economic reform and attract more foreign investment. Critics say it will allow rich businessmen to buy up the country on the cheap.
Though Russians have been able to buy buildings since the breakup of the Soviet Union 10 years ago, they have not been able to buy the land they are built on.
Attempts to adopt a similar land code in another former Soviet state, Ukraine, led to Communist MPs storming out of parliament yesterday in protest at what they said was a rigged vote, Reuters reported from Kiev.
The Ukrainian Communists said they would appeal to the constitutional court about the bill, voted through by a slim majority on Thursday.
There has been no law allowing the sale of land in Russia since the Bolsheviks nationalised it after seizing power in 1917.
But there have been unofficial sales of land, and the Russian government estimates that these cost it between 700 million and 1.4 billion pounds a year in lost taxes. [The Progress Report asks -- what sort of taxes, at what rate? Who made up these numbers, and why?]
Sales are expected to begin in a month once a system to determine land values is worked out – but this timescale could prove optimistic.
Attempts at land reform began seven years ago and have been marked by controversy.
As in the Ukraine, fights broke out between deputies in Russia’s parliament, the duma, earlier this year when the code was debated. Many ordinary people are afraid that the land sale will go the same way as the mass privatisations of the 1990s, which saw Russia’s prime assets sold off cheaply to a few politically connected insiders.
Farmland, which makes up the majority of Russia’s land, is not yet for sale: a revolt in the duma in June forced the government to drop attempts to privatise agricultural land. But a separate bill is meant to reach the duma within months.
What’s your opinion? Will the Russian people benefit, or lose? Tell your views to The Progress Report!