Hocus-Pocus

As soon as in August, a new levy, a car scrappage tax, is likely to come into force. The size of the tax, and the way it is going to be calculated, makes it not a means of funding the disposal of old vehicles but an instrument of economic policy. But first and foremost, it is going to be a monument to the protectionist’s creativity.

With the accession to WTO – and, again, this will happen in August – Russia will have to reduce import duties on automobiles. With a magnificent hocus-pocus Denis Manturov, the head of the Ministry of Industry and Trade, has created a levy that looks like a good old disposal tax but depends on a vehicle’s country of origin, its age, size of the engine and ‘special circumstances’ - and varies from zero to $20,000 for cars and to $50,000 for buses.

The beauty of the bill lies in the fact that it implies that several hundred members of Parliament, thousands of WTO bureaucrats and millions of consumers are expected to believe that scrapping a Swedish Volvo costs a hundred times more than a Russian Lada.