Izvestia, August 2, 2000, p. 5

Commenting on the passage of the new Tax Code, Deputy Finance Minister Sergei Shatalov said seriously: “I think in a few decades the approaches Russia is proposing now will be adopted by the whole world.”

The most radical item in the current tax reforms is the flat-rate 13% income tax. Shatalov has resolutely denied all speculations that this rate is a temporary measure. He has denied statements that this is a “trap set by the government in order to catch the rich.” He has given assurances that the 13% income tax rate is “one of the strategic items of the current tax reform.”

Sergei Shatalov is convinced that the passage of the second part of the Tax Code will dramatically change the economic conditions in Russia from January 1, 2001. He has confirmed that reduction of the tax burden will amount to 1.5% of the GDP in 2001 (about 100 billion rubles). However, the second part of the Tax Code presently consists of four chapters; when it is complete, there should be 20 chapters in it. In autumn the work will be continued, and by the end of the year Parliament will approve the chapters on profit and property tax, and a number of other taxes and duties. The final edition of the Tax Code will be presented by the end of 2001. The most difficult work will be connected with profit tax.

Sergei Shatalov says it is not ruled out that in the middle of 2001, the government and the Duma will return to the remaining 1% turnover tax. This tax may be canceled entirely, provided there are no shortfalls in the road funds.


Nezavisimaya Gazeta, August 1, 2000, p. 2

The federal forces fear that Chechen guerrillas may start large-scale activity in early August. As a result, the situation in Chechnya is becoming increasingly tense. The reason for this tension is not only the memories of the recent crimes of Chechen guerrillas and attacks on bases of Russian servicemen, but also concerned statements from commanders of the federal forces, and the consequent panic among civilians. The north of Chechnya, which is considered to be a peaceful region, was recently shocked by the horrific murder of two young Russian women and a young man. Their funeral took place in the settlement of Shelkovskaya, where protest demonstrations were later held. Local Cossacks have demanded that their troops should be allowed into the northern districts of Chechnya, to purge the territory of remaining guerrillas.

The Russian military has exacerbated the situation stil further. It has announced that guerrilla gangs may become more active in early August, possibly striking at some important facilities and even moving into border districts of Dagestan. Because of this, self-defense militia detachments in Dagestan villages have been put on alert. Staff of presidential aide Sergei Yastrzhembsky have denied these reports, stating that “nothing extraordinary is happening in Dagestan.” However, the entrance control regime in Grozny has become stricter, and locations of Russian federal forces are being strengthened by additional facilities. Many citizens of Grozny are evacuating children from the city. There are traffic jams on the roads leading out of Grozny.


Nezavisimaya Gazeta, August 1, 2000, p. 2

Russian President Vladimir Putin, who had been invited to visit the Baltic Fleet by Commander-in-Chief of the Russian Navy Vladimir Kuroedov, has been to the town of Baltiysk, the base of the Russian Navy on the Baltic Sea. In the course of the briefing arranged in Baltiysk the president noted that Russia cannot do without the Navy if it hopes to maintain the role in the world it has played in the past and intends to play in the future. Putin said: “Russian shores are washed by 12 seas and three oceans. These seas have huge natural resources, which Russia needs now and will need in the future. Therefore, if we want Russia to prosper and be a powerful, self-sufficient, and influential country, we must pay due regard to the Navy. And we will certainly do so.”