Prodnalog

Origins

In February 1921 a Politburo session discussed replacing the food-requisitioning system with a tax in kind on the report of Nikolai Osinsky (V. V. Obolensky) on the sowing campaign and the condition of the peasantry, and a public discussion opened in Pravda. On the decision of the Tenth Congress of the RCP(b) that March, the All-Russian Central Executive Committee adopted the decree of 21 March 1921 introducing prodnalog, the first act of the New Economic Policy.

Assessment and burden

The tax took the form of a percentage or share deduction from the produce of the household and was calculated on the basis of the harvest, the number of eaters in the household and the livestock it held. It was progressive, bearing most heavily on kulak households, while the poorest peasant households were exempted. Separate decrees in March and April 1921 covered bread, potatoes, oilseeds, eggs, dairy products, wool, hides, flax and hemp linen, tobacco and other products.

Rates and the peasant's power of disposal

The prodnalog rate was considerably smaller than that of prodrazvyorstka: under the requisition system peasants delivered 367 million poods of grain to the state in 1920–1921, whereas prodnalog was set at 240 million poods for 1921–1922, and the poor harvest meant that even less was collected. After delivering the assessed quota the peasant could use the remainder as he wished: sell it through legalized private channels, keep it as fodder for livestock, or consume it. That provided an incentive to develop the household economy and to widen sown areas, livestock and crop yields, and it created a different kind of relation between town and village. The forced requisitions of those years had been met by peasants reducing cultivated acreage and production and hiding food, a dynamic that produced the 1921 Volga famine and drove the search for a different policy. Where agricultural goods were needed in excess of prodnalog, collection was to be carried out on a barter basis, with manufactured goods given in exchange.

Abolition and the unified agricultural tax

On the decision of the Twelfth Congress of the RCP(b) of April 1923 on tax policy in the countryside, the decree of the All-Russian Central Executive Committee and the Council of People's Commissars of 10 May 1923 introduced the unified agricultural tax, and prodnalog was abolished together with the household-money, general-civil and labour-draught taxes and other local levies. The aim was to put an end to the multiplicity of taxation, so that the peasant could know in advance and firmly the amount of direct taxation due from him and deal with only one collector. Collection in money began in 1924, when hard currency was established in the USSR.

Distinctions

Unlike prodrazvyorstka, prodnalog was a tax with a fixed assessment, announced in advance, and it left the peasant the surplus after payment. It is also distinct from the unified agricultural tax, which consolidated the separate rural levies into one and came to be collected in money from 1924. The Encyclopedia of Russian History states that "In 1924 the food tax was replaced by a monetary tax on peasant households"; this is best read as compressing the 1923 replacement by the unified agricultural tax and the shift of that tax to monetary collection in 1924.

The second food tax of 1991

Prodnalog was used twice in the Soviet period. The second instance came in 1991, when the government of the Russian Republic adopted a food tax to be fulfilled in addition to the state order (goszakaz), assessed on state and collective farms and other agricultural enterprises, with newly created peasant farms exempt. Non-compliance was penalized by monetary fines or by withholding fuel, machinery and other needed inputs, but as Communist Party strength diminished the penalties were often not applied; the tax was unsuccessful and was abolished in 1992.