The Soviet Parliament tentatively approved a compromise 45 percent uniform business tax Tuesday and was forced to extend its session for at least a week to finish work on other proposed reforms.
The government's initial plan for a 55 percent tax on business profits, first introduced in April, drew strong opposition from deputies who argued it would limit incentive and slow the move to a market economy. An alternative 35 percent tax also was proposed.The Supreme Soviet, or Parliament, approved a 45 percent compromise bill on first reading Tuesday despite Deputy Prime Minister Leonid Abalkin's argument that anything less than 55 percent would endanger spending on social programs and fuel inflation by leaving businesses more money for wage hikes.
The compromise must still pass at a second reading on June 13. Discussions of reforms leading from the centralized economy to a modified market system have taken up much of the Supreme Soviet's time.
The session was extended for a week Tuesday to give deputies time for resumed debate and a possible vote on the government's plan for steep price hikes. Amendments to a law on cooperatives are still on the agenda.
On Monday the legislature passed a key law giving private businesses the same legal status as state-owned enterprises. The law equalizes the legal status of state-run firms, worker's collectives, cooperatives and individual businesses.
Cooperatives and other forms of private business were legalized in the early years of President Mikhail Gorbachev's perestroika reforms, and their status is unlikely to change much.
State-owned businesses are still likely to rely on government orders and supplies, and private businesses face bureaucratic obstacles as well as discontent over their high prices and profits.
Under the strategy to create a "modified market economy," the price of bread and other grain products would triple July 1, with other prices rising Jan. 1.