Prodnalog

"Food Tax."

The word prodnalog comes from the nouns "food" (prodovolstvie) and "tax" (nalog). It is translated as "food tax," or "tax in kind." The food tax was an instrument of state policy to collect food and was used twice during the Soviet period. The first introduction of the food tax was in 1921, during the period of the New Economic Policy (NEP). During the period of war communism (1918 - 1921), the Soviet state used forced requisitions to confiscate food from peasant households. As a result of forced requisitions, peasants reduced the acreage they cultivated and the volume of food they produced. The food they produced was often hidden from the state, so the net result was national famine and starvation in the cities, which in turn led to massive de-urbanization from 1918 to 1920.

In March 1921, with the introduction of the New Economic Plan (NEP), the Communist Party changed its strategy toward the peasantry and adopted a food tax, replacing food requisitions. The food tax specified target quotas of food that were to be delivered to the state. After the delivery quota was met, any food grown by the peasantry could be used as desired - for sale through legalized private channels, for livestock, or for consumption. Delivery quotas for the food tax were established well below the levels of forced confiscation, thereby lessening the burden on peasants, providing them stability in their calculations, and giving them incentives to produce as much as they could. The result was a rebound in agricultural production by the mid-1920s. In 1924 the food tax was replaced by a monetary tax on peasant households.

The second usage of the food tax occurred in 1991. Once again, the stimulus was the state's inability to obtain sufficient food for the urban population. In 1991 the government of the Russian Republic adopted a food tax that was to be fulfilled in addition to the state order (goszakaz). The size of the state order averaged around 30 percent of production, and the food tax added another 40 percent. The tax was assessed on state and collective farms and other agricultural enterprises. Newly created peasant farms were exempt from the food tax. In order to enforce this tax, penalties for noncompliance consisted of monetary fines, or the withholding of fuel, machinery, and other needed inputs. However, as Communist Party strength diminished in the countryside and throughout society in 1991, penalties for noncompliance were often absent, and the food tax was not successful. It was abolished in 1992.

Bibliography

Carr, Edward Hallet. (1952). A History of Soviet Russia: The Bolshevik Revolution, 1917 - 1923, vol. 2. New York: Macmillan.

Medvedev, Zhores A. (1987). Soviet Agriculture. New York: W. W. Norton.

Nove, Alec. (1982). An Economic History of the USSR. New York: Penguin.

—STEPHEN K. WEGREN

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Prodnalog (Prodovolstvenniy nalog) (Продналог, продовольственный налог in Russian, or food tax) was a fixed food tax in Soviet Russia, introduced by the Decree of the All-Russian Central Executive Committee on March 21, 1921 instead of prodrazvyorstka.

The transition to prodnalog was the first act of the New Economic Policy and a necessary incentive for raising the Soviet agriculture. The peasants knew in advance how much produce they would have to surrender to the state. The rate of prodnalog was much smaller than that of prodrazvyorstka. For comparison, in 1920-1921 the peasants surrendered to the state 367 million poods (6,010,000 metric tons) of cereals through prodrazvyorstka, as opposed to 240 million poods (3,930,000 metric tons) in 1921-1922 through prodnalog.

During the first year of introduction of prodnalog, a significant amount of bread and other products remained at peasant households' disposal, which provided an incentive for peasants to develop their own household economy, widen the sowing areas, increase the total number of livestock and productivity of crops. The rate of prodnalog on each kind of agricultural product was determined depending on local conditions and prosperity of a given peasant household. The Soviet state adhered to a policy of progressive taxation; the highest rate of prodnalog had to be paid by the kulak households.

In March and April 1921, a number of Soviet Decrees introduced a natural tax on bread, potato, oilseeds, eggs, dairy products, wool, hides, flax and hemp linen, tobacco etc. The collection of agricultural goods in excess of prodnalog, if necessary, was intended to be made on a barter basis by giving peasants manufactured goods. In order to accelerate the expansion of commodity circulation, create necessary conditions for developing farming and industry and speed up the productive forces of the country, the government encouraged small-scale production all over the Soviet Russia. The introduction of prodnalog revived the trade and created a different kind of relations between the city and the village.

By the decision of the 12th Congress of the RCP(b) (April 1923), prodnalog and other taxes in the rural areas were exchanged for a universal direct agricultural tax (decree of the All-Russian Central Executive Committee and Sovnarkom on May 10, 1923). The latter would be collected in monetary form starting in 1924, with the establishment of hard currency in the USSR.

See also

• Ural-Siberian method of grain procurement

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