Abstract

The failure to arrest the slow decline in government revenues since the early 1990s was one of the key causes of the 1998 debt crisis. While some initial revenue decline was expected during the transition as the economy was restructured and new tax systems put in place, by the mid-1990s tax collection in Russia still showed few signs of turning around. Intensive efforts, drawing on large technical assistance resources provided by the international financial institutions and other donors, produced few concrete results, owing to a combination of weaknesses in the tax structure, the poor legal basis of tax administration, and a lack of political support to reduce graft and ensure compliance by large politically connected enterprises.