Exercise 10. Read the articles filling each gap with a suitable word from the box (in the first article). Then study the vocabulary given after them.

a) Tax Administration

The tax system in Russia has changed significantly ____________________ the past five years. One of the _______________ changes has occurred in the institutional stricture of the country’s tax administration. The Taxation Ministry, which is __________ for the administration of all major taxes, was reorganized in 1991.

This institutional ______________ in the structure of the Ministry has been accompanied by numerous changes of the revenue structure of the _______________. Not only have new ______________ been introduced (the value-added tax and the expended property tax, among others), the revenue-sharing arrangements have also been adjusted a number of times over the last five years. Tax rates themselves have changed a number of __________ over the last five years. Additionally, the privatization of ________________ and the growth of new business have left the Ministry with an increased responsibility to locate and ________________ taxpayers. The growth in the number of self-employed businesses is particularly problematic because these _______________ have a higher rate of non-compliance worldwide since locating evaders is difficult.

Computerization is not widespread, which _________________ collection efficiency even more, and prosecution against evaders is difficult. Finally, the development of new systems of accounting and audit is necessary to _____________ the efficiency of tax collection.

Some of the problems in the area of tax administration are new to Russia, such as the development of new enterprises, the change in the structure of the Ministry, development of international systems of accounting, and increased commerce with foreign firms. These problems continue to exist under the _______________ system of taxation as well.

 

b) Tax System Design

Recent studies have singled out some of the desired features of the tax system that should emerge as countries develop. They are as follows:

Concentration of revenue sources. A system that raises revenue from a limited number of taxes and rates may substantially reduce administration and compliance costs. Avoidance of numerous taxes may also facilitate the assessment of the effects of policy changes and avoid an impression of excessive taxation.

Broad and objectively defined tax bases. A broad tax base with limited exemptions enables revenue to be raised with relatively low rates. Substantial erosion of the tax base through exemptions requires much higher rates to achieve a given amount of revenue. Tax bases should be defined so as to ensure that producers and consumers can clearly estimate their tax liability when they plan activities.

Minimization of collection lags. In an inflationary environment the real value of tax receipts may decline substantially when there are long lags in payment. High penalties are necessary to ensure that legal delays are not compounded by delinquency lags.

Tax neutrality. The tax system should finance government operations with the least cost and disturbance to the patterns of production, and the generation and use of income. Hence, neutrality of the tax system is considered desirable, in the sense that distortions in incentives should be limited unless there are compelling reasons to discourage the production, consumption or trade of a particular commodity. The activity, most profitable before tax, should remain most attractive after tax.

VOCABULARY

a)

Tax administration                система сбора налогов, налоговое ведомство

Self-employed business         самостоятельное, некорпоративное предприятие

To locate evaders                  обнаруживать, выявлять уклоняющихся от уплаты налогов

Widespread                           широко распространенный

Prosecution                            преследование

 

b)

Administration costs             расходы, связанные со сбором налогов

Compliance costs                              расходы, связанные с обеспечением налогового законодательства

Tax liability                           налоговые обязательства

Lag                                        разрыв, запаздывание

Penalty                                  штраф

To compound                        усложнять, увеличивать

Delinquency                          правонарушение

Neutrality                              нейтральность

Disturbance                           нарушение

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