Property Tax Developments in the Russian Federation


The “revolutionary transformation” (Gorbachev 1987, p. 33) that in a very short time dismantled the Soviet empire and shattered communist control was set in motion when Mikhail Gorbachev rose to power in 1985 in the midst of worsening economic crises and public discontent. By 1987 Gorbachev had introduced the concepts of glasnost (opening Soviet society to internal criticism and external comparison) and perestroika (the need for restructuring that society). Together, these concepts set the course for destruction of the old order and the creation of a new Russian nation. That transformation is still under way, as a new order seeks to replace 70 years of communist authoritarianism and central planning with democratic institutions and a market economy able to survive global competition in the modern age. Restructuring the economy and relinquishing bureaucratic and political control are complex and daunting tasks in this nation, which even without its former republics is the largest land mass on Earth (17.075 million square miles with a population of 148.7 million people). When Gorbachev introduced “the most important and radical program for economic reform our country has had since Lenin introduced his New Economic Policy in 1921” (Gorbachev 1987, p. 33), he did not envision the destruction of the entire system. He recognized, however, that the central government system of setting production outputs and fixing prices for more than 200,000 individual commodities was wasteful, inefficient, and not sustainable in a postindustrial world, and that corruption and the lack of individual incentives were stifling productivity. By 1990, as communist power was being rejected throughout Eastern Europe and the new political freedom to criticize the power structure was being actively demonstrated (Smith 1991, p. xxi),1 Russians chose, in free elections, reform-minded mayors for the cities of Moscow and St. Petersburg, and elected Boris Yeltsin as president of the new Russian Soviet Federal Socialist Republic. With apparent popular support, the economic reformers in the Gorbachev government proposed a 500-day plan that would begin the transition from a command economy to a market economy. It included price reforms; stabilization measures; budget, tax, and monetary policies; and land privatization. The plan was predicated in part on the economic independence of the Soviet republics, which had declared their sovereignty, but was met with a firestorm of opposition from the Soviet power structure. The disagreements were not so much about economic reforms as about loss of control (Posner 1992, pp. 104–10). The clash between reformers and the old guard escalated and culminated in the failed coup on August 19, 1991, on the eve of Gorbachev’s return to Moscow to sign a new treaty with eight

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Cite this paper

@inproceedings{Malme2001PropertyTD, title={Property Tax Developments in the Russian Federation}, author={Jane H. Malme and Natalia I. Kalinina and Mikhail Gorbachev}, year={2001} }