A QUESTION OF SURVIVAL

State Duma and the North

Valentina Pivnenko,
Chair of the State Duma Committee
For the Problems of the North and Far East

         Many people are aware of the problems of the Russian North such as delivery, the exodus of people from regions not suitable for life and the never-ending lack of means. The state has made some attempts to solve these problems, but these issues invariably rise again. What is the matter? The main problem is the lack of government attention to these territories. Our Committee on problems of the North and Far East, supported by other deputies elected in the Northern regions, has drawn attention many times to the need for a revised policy for the North. Foreign countries have supported the development of their northern territories in every way possible. The US, Canada, Finland and other countries have spent a great deal of money because they know that what seems a burden today will become a leading factor in their future economies. This is what we are trying to prove to the Russian government.
        Our Committee works on legislative solutions to a number of issues. I will describe some of them briefly.
        Year after year the volume of transfers from the center to the North has been growing. Yet the North is the economic base of the whole of Russia. It provides oil, gas, gold, diamonds and a lot of other minerals that are vital for the development of the country's industry. This paradox can only be explained by the lack of development in inter-budget relations. The volume of taxes the center receives from the North is almost twice as much as the North receives from the center in the form of transfers. That is one of the biggest problems of the northern regions. It is necessary to change the tax system. A special approach to northern enterprises should be established. To produce a product in severe weather and climatic conditions is much more expensive than in other regions. However, the tax formula is the same everywhere.
        At the Committee meetings, we considered a number of amendments to the second part of the tax code. In particular, we suggested setting a VAT rate at 15 % for Far Northern enterprises and similar regions. This is 5 % lower than in the rest of Russia. This amendment will promote the competitiveness of northern enterprises both in the Russian and the world market. Moreover, the reduction of the tax burden will revive the industry and promote the further growth of taxable goods as well as the amount of taxes collected. The next problem concerns the guarantees and compensations for Northerners. It is no secret that the government is trying to reduce its commitment to them. These actions are dangerous. The revocation of state guarantees will lower the life standard, which is already pretty low. The minimal cost of life is twice as much in the North as in the rest of the country.
        During its spring session, our Committee worked hard on the preservation of earlier established state guarantees and compensations to the population of the Far North and similar territories. We "inherited" an old State Duma bill introduced by the government "on State Guarantees and Compensations for People who Live and Work in the Far North and Similar Territories", that considerably limits the state's support. We managed to protect the interests of northerners by persuading the government to revoke that bill. A little while ago, when the Lower Chamber's spring session was ending, the Committee on the Problems of the North and Far East (supported by other deputies) won another important victory: the State Duma rejected the second reading of the bill "on the Suspension of Some Legislative Documents of the Russian Federation in relation to the Federal Law "on the Federal Budget for the Year 2000". One of the points on that bill presupposed the repeal of guarantees and compensations that were not included in the budget for the year 2000. We opposed that document, because while the bill's wording remains undecided, there is still a real chance of paying Northerners with money from the additional income to the budget (increased oil price, income from export activity, etc.).
        But this is not all. In the original wording of the bill there was a provision by which the state budget would stop financing all guarantees and compensations to the North, leaving this support in the hands of regional producers. Our Committee had difficult discussions with the State Duma Committee for Budget and Taxes and with the government. We managed to convince them to maintain the state budget as a source of financing together with regional budgets and the support of local producers.
        Another perennial problem is delivery to the North. It is carried out through many intermediaries who are much more interested in profit than in the actual accurate and timely delivery to Northerners. Reducing the intermediary chain would provide faster and cheaper delivery of goods. Moreover, a detailed regulation is needed on the juridical allocation of state money to cargo delivery.
        The first step in that direction were the May parliamentary hearings on delivery to the North. We discussed the draft on a basic law. The purpose of this law is to regulate product delivery to the regions of the North that are difficult to reach. We heard many opinions on the issue, which we took into consideration when concluding the document. The draft with all amendments and proposals will be discussed by the State Duma during the autumn session. A number of problems related to product delivery to the Far North will be solved with the approval of this law.
        At present, State Duma deputies from the northern regions have formed an inter-fraction group called "North of Russia". The purpose of this new union is to consolidate efforts and coordinate the activities of northern deputies in the protection of the electorate's interests, in solving the region's economic and social problems and in implementing relevant bills.
        A lot of problems have accumulated in the North. Yet as the reader can see, specific work is already being undertaken in most directions. Real results can already be seen in many cases.