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Visions of Economic Recovery by Russian Parties

Posted By Yevgeny Volk On March 31, 2009 @ 10:33 am In International | Comments Disabled

The debates that took place last week within the government agencies, the State Duma and parliamentary party leaderships have proved that none of them has a clear idea of how to achieve an economic recovery. Most of the parties that number themselves among the opposition, whether they are Communists or the ultranationalist Liberal Democratic Party, are confining themselves to a set of populist slogans, ill equipped to combat the economic crisis.

The Russian Communist Party plenary meeting was most telling in that it kept harping that the present crisis proved the “collapse of liberal capitalism” and that only socialism could be an alternative to it. Curiously, Communist leader Gennady Zyuganov described the United States and Obama’s agenda as an example of this socialist approach.

The Zyuganov-set objective to enroll young, enthusiastic and gifted young people into his party in celebration of the 130th anniversary of Joseph Stalin this year shows how far Communists are removed from reality.

Admittedly, from the economic freedom perspective, the government’s and parties’ anti-crisis measures contain certain rational points. They primarily concern the tax reform. Plans to hike social security taxes from 26 to 34 percent virtually have been dropped. Projects elaborated by left-wing parties and some government agencies to reinstate progressive income tax rates have been forsaken, thus far. Meeting with Vladimir Putin, Liberal Democratic Party leader Vladimir Zhirinovsky and chief Communist Gennady Zyuganov – independently of one another – advised the Prime Minister to replace the VAT with a sales tax, replicating American taxation practices. Zyuganov even proposed to establish this tax rate at 4 percent. The center-left Just Russia Party leader Sergey Mironov is lobbying cuts in Russia’s flat 13-percent income tax for under-privileged people.

Certainly, amid a deepening economic downturn the government is unlikely to lower the tax burden for the populace, fearing an immediate drop in tax revenues. But the mere fact that most of the parties recognize the need for low taxes in order to stimulate the economy is a fairly good sign that the economic thought in Russia is undergoing liberalization.


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