09.06.07

The interests of the Ministry of Finances (MinFin) and the Ministry of Economic Development and Trade (MEDT)  may come in conflict again in the Cabinet Council.

MEDT traditionally has many questions for the tax service. The Federal Taxation Service (FTS) sets strategic goals such as accuracy of calculations, completeness, promptness of payments of taxes and dues, and increasing quality of taxing procedures and information distribution, saving taxpayers’ costs. MEDT, in turn, is consumed with a desire to leave its mark and to add the following points:

1. MEDT has suggested calculating a share of responses furnished by the tax authorities in relation to the total number of applications.
2. To fight corruption and crimes committed in public offices by monitoring the number of violations. Economists also feel that tax authorities have not defined the parameters of non-program activity.

FTS does not support this point claiming that “detection of violations is an exclusive jurisdiction of law-enforcement agencies."  Even upon receiving information about a violation, tax authorities are not able to examine it in its entirety since they do not hold the right to carry out a criminal investigation. Also, tax authorities believe that the “number of employees held liable according to article 290 of the Criminal Code of RF” cannot be considered a measure of work effectiveness of tax authorities. FTS hasn't stopped at this.

FTS does not want to accept German Gref’s remarks regarding the share of responses given by tax departments on a scheduled basis, not because the stated timeline is rarely met, but because of the absence of an automated system of electronic document management. Therefore it seems that administrative regulations developed by the Governmental Committee on Administrative Reforms can be safely forgotten. If there is no system – there is no problem. However, if MEDT still really wants to receive this evaluation, tax authorities have expressed readiness to purchase a system of electronic document management for 680 million rubles.

The criteria regarding the effectiveness of the tax authorities has not changed much over time. It is planned to establish 8 criteria of work effectiveness for tax authorities, with each share evaluated in relation to its contribution to overall result of FTS activity:

1. Tax collection (18%);
2. Share of taxpayers with an ability to access personal information on their budget settlements through communication channels and Internet (11%);
3. Share of tax authorities decisions voided by court procedures (16%);
4. Ratio of number of complaints considered in pre-trial manner, and number of court cases initiated by taxpayers (15%);
5. Reduction of debt (13%);
6. Share of taxpayers finding quality of work of tax services satisfactory (6%);
7. Number of individuals and legal entities receiving information from the Internet Registry of Legal Entities(6%).
8. Number of individuals and legal entities receiving information from the Internet Registry of Individual Entrepreneurs(6%).

According to preliminary information, tax collection should increase by approximately 0.1 percentage point per year.

Also, it is estimated that in 2007 shares of recovered claims should exceed 50.1%, and by 2010 – 50.4%.

In return, tax authorities have not forgotten their president's desire to create a monetary reward system for well-performing employees. A source within FTS has reported that financial rewards will only be received by certain departments within FTS and that the central office of the agency may not be included in this system. It is assumed that bonuses will be distributed only among those employees who work with taxpayers and perform audits.

In turn, the tax authorities will need to tighten administration of “salary taxes”. The Cabinet Council has entrusted the development of necessary measures to the Ministry of Finances, the Ministry of Economic Development and the Ministry of Health and Social Development.

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