Mikhail Khodorkovsky and liberty

As a lawyer advising foreign investors in Russia, I am asked more about the Khodorkovsky case than any other issue. As a guest in Russia I don't think it would be polite to comment here on fears that the case is politically motivated. If nothing else, that would be rude to my professional colleagues in the Russian judiciary. Until someone produces evidence that they have been corrupted (and a judge taking orders from the executive branch of government would be just as corrupt as a judge taking a bribe) I prefer to assume that they are honest.

Instead, let me use the news of Mr Khodorkovsky's conviction for tax fraud to highlight a point I have made before about the civil liberties implications of taxation. Income taxes, corporate or personal, force governments to be intrusive. They have to enquire into the accuracy of tax declarations to ensure they collect the full sums they need to do their "job". Inevitably, they take every bit as hard a view of people who don't pay their taxes as those of us in business take of those swine who don't pay their bills. Having a monopoly of military and police power in their countries however, they are able to do to their "non-payers" what the rest of us can only fantasise about doing to ours.

If Yukos and Mr Khodorkovsky had been taxed on their expenditures, not their income, this case would never have arisen. Mr Khodorkovsky and Yukos need never have made the disputed declarations. The taxes would have been collected without fuss and without temptation. Millions expended in pursuing the case would have been saved. A major Russian company would still prosper.

And potental foreign investors would not be asking impertinent questions about the probity of the Russian judiciary.