Turnover Tax

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The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Turnover Tax


a means of generating state budgetary income.

Under capitalism, the turnover tax is the major type of indirect taxation and takes the form of price increases on commodities sold. In Great Britain, France, and the Federal Republic of Germany, value added taxes are imposed; in the United States, sales taxes are levied.

In the USSR and the other socialist countries, the turnover tax represents the portion of accrued cash, or net income, that has been acquired by socialist enterprises and production associations for direct conversion into state revenue. Through the turnover tax, the state mobilizes significant monetary resources for use in expanding socialist reproduction and satisfying other national requirements. The turnover tax is also used as an important economic tool to regulate the rate of profitability and thus to strengthen economic self-sufficiency. It is also a basic source for balancing republic and local budgets. By its economic content, the turnover tax is in fact not a tax—it neither adds to the price of a commodity nor subtracts from the wages of production and office workers or from any other income payable to the working people. It possesses only such external characteristics of a tax payment as compulsory remittance, fixed amount, and predetermined schedule.

The division of accrued cash into profit and turnover tax and the principles for transferring all such funds to the budget were established in the tax reform of 1930. The turnover tax is paid by all profit-and-loss state and cooperative enterprises except kolkhozes, and also by enterprises operated by public organizations. The turnover tax is collected mainly in economic sectors related to light industry and the food industry. These sectors bear a heavier share because not only the value of the surplus product they themselves have created but also a portion of the surplus value produced in other sectors, such as heavy industry, construction, and agriculture, must be accounted for in their turnover taxes.

No turnover tax is payable on a great many consumer goods. Among these are bread and baked goods; meat, meat products, and sausage; milk, milk products, butter, and cheese; canned goods; fruit and vegetables; drugs; and books. In heavy industry, the turnover tax is levied on petroleum and gas, electric power, and certain types of machine building.

The turnover tax can be levied in several ways: as the difference between the enterprise’s retail and wholesale prices, minus rebates; by a fixed scale, set in rubles per unit of output measured by volume, as per ton of petroleum products, cereals, or cured tobacco, or per thousand cubic meters of natural and by-product gas; or as a percentage of total turnover, as with goods for which wholesale prices have not been set by the enterprise. The revenue gained from turnover taxes that are based on price differentials is the most important; the share of overall turnover taxes obtained from this source increased from 74 percent in 1964 to 80 percent in 1972. At the same time, turnover taxes levied according to fixed scales expressed in percentages of total earnings declined from 12 percent to 5.8 percent of the total.

The turnover tax plays an important role in providing the state budget with stable, regularly receivable payments. In absolute terms, the amount of turnover tax revenue received by the state budget is steadily increasing: in 1960, the amount was 31.3 billion rubles; in 1965, 38.7 billion rubles; and in 1972, 55.6 billion rubles. At the same time, the proportion made up by turnover taxes of both total cash accruals by enterprises and state budgetary income has dropped. Turnover taxes represented 48.0 percent of enterprise cash accruals in 1960, 46.5 percent in 1965, and 37.8 percent in 1972. Turnover taxes provided 40.7 percent of state budgetary income in 1960, 37.8 percent in 1965, and 31.7 percent in 1972. This decrease in the role of the turnover tax is brought about by the increased role of profit as the main form of cash accrual and the primary source of state budgetary income.

In order to stimulate the production of consumer goods, to expand their diversity, and improve their quality, manufacturing enterprises may be extended certain privileges, among which may be full exemption from the payment of turnover taxes on merchandise sold.


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
falls within the scope of the prohibition (outlined in the Sixth VAT Directive) of other national taxes which can be characterised as turnover taxes, "provided that, for a representative sample of businesses subject to both taxes, the ratio between the amounts paid in VAT and the amounts paid in the disputed tax is substantially constant" .
Interpretation of articles on the harmonisation of the laws of the Member States relating to turnover taxes .Common VAT system: uniform basis of assessment: contracts between companies for the delivery of medicines and prostheses with the sole intention of obtaining a tax advantage
Article 4(1) of Directive 95/59/EEC on taxes other than turnover taxes which affect the consumption of manufactured tobacco harmonises the definition of "cigarettes".
They must not have more than a certain number of employees and their balance sheet total (the value of the company's main assets defined as the total of subscribed capital unpaid, formation expenses, fixed assets, current assets prepayments and accrued income) and net turnover (income from sales after deduction of rebates, value added tax and other turnover taxes) must be below certain figures.
Under the terms of the United Kingdom's accession to the European Community, EC measures on the harmonisation of legislation of Member States concerning turnover taxes do not apply to Gibraltar.
The Directive has been implemented in Gibraltar as far as taxes on income and capital are concerned, but not in respect of VAT and excise duties.Under the terms of the United Kingdom's accession to the European Community, EU measures on the harmonisation of legislation of Member States concerning turnover taxes do not apply to Gibraltar.
For this measure, Spain has also failed to follow the Commission procedure under Article 25 of the Sixth Council Directive on the harmonisation of the laws of the Member States relating to turnover taxes (the 6th VAT Directive - No 77/388/EEC);- the modification of the tax regime for agricultural co-operatives which are selling agricultural diesel to non-members of these co-operatives, resulting in a lower income tax rate for the co-operatives.
The Council granted Austria a derogation until 31 December 2005 derogating from Article 11 of the Sixth Council Directive (77/388/EEC) on the harmonisation of laws of the Member States relating to turnover taxes. This derogation concerns international passenger transport (carried out by taxable persons not established in Austria) by means of motor vehicles registered in Austria.The Council adopted a Decision amending Article 1 of Decision 1999/81/EEC authorising Spain to continue to apply (until 31 December 2003) a measure derogating from the Sixth VAT Directive in the used and waste materials sector.
Sweden and Denmark have been granted a derogation from certain provisions of Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes (Sixth VAT Directive).