receipts.
Following the October Revolution, the Bolshevik government depended on confiscations and fiat money, but this chaotic strategy of covering expenditures soon led to peasant uprisings, and the government had to switch to a tax in kind (prod-nalog)-replaced by cash in 1924-on the peasantry. After meeting their obligations, rural agriculturists could sell their surpluses on the local market. HowENCYCLOPEDIA OF RUSSIAN HISTORY Table 1.
1940
1965
1984
Total Revenue (billion rubles)
18.0
102.3
376.7
Turnover tax
59%
38%
27
Payments from profits
12
30
31
Cooperatives’ taxes
2
1
1
Mass bond sales
5
Direct taxes
5
8
8
Social insurance contributions
5
5
7
“Other”
12
17
27
SOURCE: Narodnoe Khoziaistvo (National Economy), 1973, 1978, and 1984. Courtesy of the author. ever, government efforts to keep the procurement price for grain low increased the actual surplus taken. Moreover, the nepmen had to pay a temporary tax on super-profits starting in 1926.
During the Stalinist period the government greatly increased the burden of taxation to an estimated 50 percent of household income. As shown, the principal mode of taxation was on the nationalized manufacturing and mining sectors, plus heavy exactions in kind from the collective and state farms. The Finance Ministry also conducted compulsory bond sales, but these were phased out during the 1950s.
In more recent Soviet times the regime imposed a mild income tax on employees, with a top rate of 13 percent above a certain exempt amount. But authors, physicians in private practice, tutors, landlords, craftsmen and like independents would pay at treble these rates or up to a marginal rate of 81 percent. Bachelors (and small families until 1958) paid a 6 percent surtax, but military personnel, students, and dwarfs were exempt. There was also a fairly stiff tax (from 12 to 48% by 1951) on money and imputed incomes from private plots in addition to a small tax on kolkhoz net income. This was in addition to forced deliveries at lower than market prices.
Soviet authorities strongly preferred indirect taxes over those imposed directly on persons. Apparently they believed workers would be more sensitive to their wages and wage differentials than to the prices they paid-money illusion. However, after 1947 they also endeavored to reduce official prices on goods of mass consumption.
While the turnover tax remained the single largest source of revenue until the 1960s, the type
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A female entrepreneur watches as a Moscow tax-police inspector confiscates goods from her unlicensed shop. PHOTOGRAPH BY ALEXANDER SALYUKOV/ASSOCIATED PRESS. REPRODUCED BY PERMISSION. of tax which increased the most during later Soviet times was that on profits. In 1950 the turnover tax accounted for 56 percent of the total, while deductions from profits provided only about 10 percent. By 1970, however, turnover tax declined to 32 percent, while deductions from profits rose to 35 percent of the consolidated USSR budget. However, the distinction between these two taxes is not sharp: both are enterprise taxes unrelated to the ability of citizens to pay.
To these taxes on profits, which after all belong to the state as owner, might be added retained profits devoted to state-mandated investments. After 1965 the regime added a small charge on net capital and broader rental payments in addition to remittances of the free remainder of profits. The miscellaneous category included large and rising profits from foreign trade-for example, on imported grain or exported oil-a stamp duty on legal documents, an inheritance tax, a local property tax, and a tax on automobiles, boats, and horses. All this added up to a considerable burden of taxation-approximately 45 percent of Soviet national income in the postwar period,
