Originally created 11/28/98

Russian government to cut taxes



MOSCOW -- Russia's government announced plans Friday to cut taxes in an effort to collect more of them and pump some life into the moribund economy.

Tax cheating is a huge problem in Russia. Some economists blame it for the cash crunch that led the government to devalue the ruble and default on its foreign loans in August. Those actions set off a banking crisis that plunged the country into economic turmoil.

Critics say the government brought the mess on itself by setting rates so high many businesses can't pay.

Prime Minister Yevgeny Primakov said the government will propose reducing the value-added tax from 20 percent to 14 percent and the profit tax from 35 percent to 30 percent.

"These measures help expand the base for taxation," the premier said, according to the ITAR-Tass news agency. He added that the VAT cut should be especially popular, since it will lower the cost of electricity and other consumer expenses.

The tax cuts will serve as a foundation for the government's proposed 1999 budget, Primakov said. He said the government plans to cut the VAT further to 10 percent in 2000.

The government also proposed laws to fight what it said was the growing influence of organized crime in Russia.

The package was apparently in the works before last week's shooting death of a popular member of parliament, Galina Starovoitova.

It includes stiffer penalties for arms trafficking and greater government control over private security companies, the Interfax news agency said.

It also would require candidates for public office to provide more information about themselves and to prove they do not suffer from alcoholism, mental illness or drug addiction.

Also Friday, Russian flight controllers said they fixed two minor glitches on the first orbiting module of the new international space station.

The Zarya, or Sunrise, had developed three problems since its launch a week ago: one battery was failing, one of the antennas hadn't unfolded properly, and the humidity level in the unmanned cabin was too high.

However, the antenna has apparently unfolded, and repeated tests showed it was working perfectly, Mission Control officials said.

Even if trouble develops again, it shouldn't affect the scheduled rendezvous with the American space shuttle Endeavour, which is to be launched Dec. 3 carrying the Unity connecting module.

The accumulator battery -- one of Zarya's eight -- was fixed through commands sent by controllers on the ground, ITAR-Tass reported.

The humidity level in Zarya's cabin still remained too high on Friday. But space officials said they expected the problem to resolve by itself after the module has had enough time to heat up.