Duma Gives Boost to Yeltsin’s Bailout Package--and Sales Tax to Russians

Russia’s lower house of parliament, under pressure to raise revenue so the country can qualify for $17.1 billion in new foreign loans, passed landmark legislation Thursday imposing a 5% sales tax on consumer goods.

The measure, which would raise an estimated $6.5 billion for Russia’s regional and local governments, is the centerpiece of a program proposed by President Boris N. Yeltsin to revive the struggling economy by slashing spending and raising taxes.

But lawmakers stopped short of approving the government’s entire, $16.5-billion austerity package, required by the International Monetary Fund and the World Bank as a condition of the emergency bailout.

“We have accomplished at least 50% of what the government wanted us to and 100% more than what the government really expected us to do,” said Communist deputy Viktor I. Ilyukhin. “I don’t think we are going to make any more concessions.”

Still, the Duma, as the lower house of parliament is called, agreed to convene again today to debate the final controversial measures, including a proposed tax on land that would raise another $5.2 billion in revenue.

Rapid approval of the stabilization program is critical to Russia’s economic future as the government tries to get out from under a mountain of short-term debt and lure back investors scared off by fears of devaluation of the ruble. It also is crucial because the IMF and the World Bank will withdraw their bailout offer if all or most of the package is not enacted.

The board of the IMF, the biggest lender involved in this rescue package, will meet Monday to decide whether to approve an immediate, $5.6-billion disbursement from the $17.1-billion loan package negotiated in Moscow earlier this week.

Altogether, loans totaling $22.6 billion are riding on parliament’s approval of the austerity program--the latest bailout, plus $5.5 billion in loans tentatively approved earlier by the IMF and the World Bank.

The Russian stock market, which jumped 28% in value in the two days after announcement of the loan deal, fell 4.85% Thursday as the Duma debated the government’s proposal.

The Communist-dominated Duma has been one of Yeltsin’s biggest obstacles in enacting market-oriented programs and cutting back on the size of the government. But the current fiscal crisis, which has touched off widespread protests over unpaid wages and pensions, has given Yeltsin a stronger hand to push through measures that have been under debate for years.

So far, the Duma has passed more than half the two dozen or so major bills in the government package, including a long-sought revision of the tax code, a cut in the profits tax from 35% to 30% and an imputed tax on small businesses--which are notorious for not paying their taxes.

The Duma also approved measures imposing a tax on interest from bank accounts, permitting the sale of goods at prices lower than cost and cutting most subsidies to families with children.

“There was too much pressure on us day and night coming from all directions, from the president, from the prime minister, from television and newspapers,” said Communist deputy Vasily I. Shandybin. “My fellow Communists are different from those that sat in prison and led lives of hardship [before the Bolshevik Revolution]. Some of them couldn’t bear the pressure and broke down.”

Early in the day, however, it appeared the austerity program was headed for defeat. The Duma rejected the sales tax measure and the proposed land tax--which together account for about 70% of the money to be raised or saved overall.

Then Finance Minister Mikhail M. Zadornov took the floor and chastised the members for jeopardizing the bailout. “These are the key measures that could take the country out of the crisis, but they get no support in the Duma today,” he protested.

Yeltsin’s allies in the Duma began discussing the possibility that the president would dissolve the house and call new elections. Soon after, the Duma revived the sales tax measure and approved it, along with other bills in the package.

But the deputies refused to pass the land tax, ardently opposed by the Communists, who believe land should not be sold to private owners in the first place.

“I think the Communists sabotaged the anti-crisis program intentionally,” said Duma deputy Nikolai I. Travkin, a member of the liberal Yabloko faction. “They have nothing against it as far as its content is concerned. They just don’t want to demonstrate all too obviously to their electorate that they are playing ball with the government.”

Sergei Loiko of The Times’ Moscow Bureau contributed to this report.