Punitive Tax Needs Quick Clarification
04 August 1994
When the Marquis de Custine, best described as a 19th-century Cold War warrior, arrived in St. Petersburg for a grand tour of Russia around 150 years ago he remarked that "every stranger is treated as culpable at the Russian frontier."
De Custine was a biased judge of tsarist Russia, whose autocratic political system he despised. Yet one could not but remember his words on hearing Tuesday from international moving companies that a tax regulation is imposing a punitive 60 percent customs duty on the personal effects of foreigners leaving or entering the country.
How could this tax -- unique around the world -- be justified? Foreigners do not bring their furniture, family heirlooms or musical instruments to Russia for profit: They bring them to continue their lives and those of their families.
But now it appears -- to their own immense surprise -- that the moving companies got it wrong. They have, according to a top customs official, been collecting and paying to the customs authorities taxes that were never due. The 60 percent, we are told, applies only to goods bought in Russia.
This comes as a relief. For if the wisdom of the tax on Russian goods is also arguable, at least it seems that the authorities have not decided to revert to the xenophobic isolationism of the Marquis de Custine's day. Had customs been serious about the 60 percent duty on personal effects, it would have created just one more reason for foreigners not to come to Russia to invest.
Yet we, like the moving companies and foot soldiers in the customs service, remain thoroughly confused.
If the moving companies -- whose daily business it is to clear customs -- cannot figure out whether punitive taxes are due, how is anybody else supposed to argue his or her case with a Sheremetyevo customs official? Should employers advise new hires on their way to Russia to come with nothing but the shirts on their backs or not?
To be fair, Russia's customs officials deserve some sympathy. They have had to relearn their entire trade since the collapse of the Soviet Union, leaving behind regulations of Kafka-esque absurdity that they had applied over a lifetime. That there should now be pandemonium in the customs halls of Russia is understandable.
But it is up to the customs authorities to leave Kafka behind by issuing clear instructions that will clear up such glaring inconsistencies as the levy on personal effects.
After all, to value all foreigners' personal belongings at the borders and to extract 60 percent taxes is no small task. Collection of such a large amount of money can hardly have gone unnoticed by the top customs officials in Moscow.
De Custine was a biased judge of tsarist Russia, whose autocratic political system he despised. Yet one could not but remember his words on hearing Tuesday from international moving companies that a tax regulation is imposing a punitive 60 percent customs duty on the personal effects of foreigners leaving or entering the country.
How could this tax -- unique around the world -- be justified? Foreigners do not bring their furniture, family heirlooms or musical instruments to Russia for profit: They bring them to continue their lives and those of their families.
But now it appears -- to their own immense surprise -- that the moving companies got it wrong. They have, according to a top customs official, been collecting and paying to the customs authorities taxes that were never due. The 60 percent, we are told, applies only to goods bought in Russia.
This comes as a relief. For if the wisdom of the tax on Russian goods is also arguable, at least it seems that the authorities have not decided to revert to the xenophobic isolationism of the Marquis de Custine's day. Had customs been serious about the 60 percent duty on personal effects, it would have created just one more reason for foreigners not to come to Russia to invest.
Yet we, like the moving companies and foot soldiers in the customs service, remain thoroughly confused.
If the moving companies -- whose daily business it is to clear customs -- cannot figure out whether punitive taxes are due, how is anybody else supposed to argue his or her case with a Sheremetyevo customs official? Should employers advise new hires on their way to Russia to come with nothing but the shirts on their backs or not?
To be fair, Russia's customs officials deserve some sympathy. They have had to relearn their entire trade since the collapse of the Soviet Union, leaving behind regulations of Kafka-esque absurdity that they had applied over a lifetime. That there should now be pandemonium in the customs halls of Russia is understandable.
But it is up to the customs authorities to leave Kafka behind by issuing clear instructions that will clear up such glaring inconsistencies as the levy on personal effects.
After all, to value all foreigners' personal belongings at the borders and to extract 60 percent taxes is no small task. Collection of such a large amount of money can hardly have gone unnoticed by the top customs officials in Moscow.
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