Tax, Turnover

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Turnover tax (nalog s oborota ) was a tax on enterprise gross output, the main source of government revenue during the first several decades of Soviet planned economy, officially considered part of the surplus product in Marxist terms. It was introduced in 1930 for the purpose of unifying previously diverse taxes.

The difference between the final retail price for consumer goods (and most fuels) and the industry's wholesale price, as set by the Soviet pricing authorities, less any handling charges, is the turnover tax. (Before 1949 this tax was also applied to producer goods for reasons of fiscal control.) Sometimes this levy was imposed as a unit tax, as a percentage of the sale price, or in other ways. Regardless of the method of collection, the turnover tax rate is thus the difference divided by the wholesale (or retail) selling price. These rates differed widely. In the case of agricultural products, the turnover tax comes from the difference between the procurement price and that at which the produce is resold by state organs. On salt and vodka, the turnover tax resembled an excise tax. In 1975 about one-third of the entire revenue from turnover taxes came from wines and spirits, hence any effort to reduce drinking, to the extent they were successful, posed a fiscal dilemma, as the Mikhail Gorbachev campaign discovered.

The turnover tax was administratively simple. Collecting the tax was easier from the relatively small number of industrial enterprises and wholesale organizations, most of which had decent accounts. Income taxes would have had to be collected from millions of citizens, many of whom were still illiterate or at least innumerate. The variable markup allowed retail prices to be changed when inventories warranted, without altering the industry wholesale price on which planning indices depended. For example, turnover taxes on food were lowered several times during the 1950s to allow the state to pay higher procurement prices without affecting politically sensitive retail prices. A similar situation applied to fuels for household consumption. From 1954 until the late 1960s, official retail prices were held approximately constant, quite probably to save administrative effort. It also permitted certain prices to be disproportionately low, such as those on children's clothing and approved reading material.

As compared to other sources of revenue, the turnover tax was quite large in the 1930s, but fell in relation to taxes on profits and incomes during the 1950s.

See also: taxes


Bergson, Abram. (1964). The Economics of Soviet Planning. New Haven, CT: Yale University Press.

Holzman, Franklyn. (1974). "Financing Soviet Economic Development." In William L. Blackwell, ed., Russian Economic Development from Peter the Great to Stalin. New York: New Viewpoints.

Nove, Alec. (1986). The Soviet Economic System, 3rd ed. Boston: Allen & Unwin.

Martin C. Spechler