President Vladimir Putin told Russian big business on Tuesday to pay its taxes, but sought to allay fears that the state may launch major new tax probes. "Business should get used to paying taxes and observing the law, and not seek ways to avoid paying taxes," Putin said in a speech to the Russian Union of Industrialists and Entrepreneurs, the country's largest business lobby. Putin did not refer explicitly to the case of oil major YUKOS, which faces ruin after being hit with a total of $18.5 billion in back-tax claims. But he suggested the YUKOS case may be a one-off. "The state will guard the interests of reputable business, and large-scale investigations, including tax probes, should not be regarded as a signal that every newly founded company poses a threat to the state's interests," Putin said. The Kremlin's onslaught against YUKOS, Russia's largest oil exporting company, has been widely seen as a drive to neutralize the company's politically ambitious former chief executive, Mikhail Khodorkovsky. Offering reassurance to other Russian "oligarchs" who acquired vast industrial assets at knock-down prices, Putin pledged the government would respect property rights and would not roll back past privatizations. "Overall, the state should guarantee the inviolability of the existing results of privatization and the comprehensive defense of property rights as one of the foundations of a market economy," he said. "And state officials are obliged to defend private property no less than state property." Khodorkovsky, arrested just over a year ago, is on trial on charges of tax evasion and fraud and could go to jail for 10 years if convicted. The YUKOS affair has clouded Russia's business climate and, some economists say, hurt the investment needed for Putin to meet his ambitious goal to double the size of the economy in a decade. Bailiffs plan to sell off YUKOS's main Siberian production unit, Yugansk, in a move which would rip out the heart of one of the most successful companies born out of the controversial privatizations of the turbulent 1990s.
