ent and profit deductions 10 percent of
revenue; by 1967 their respective shares were 43 and 26 percent. Social
insurance premiums contributed between 3.2 and 4.5 percent, while the
yield from direct taxes on the population declined from 2.7 percent in
1960 to less than 1 percent in 1967. In 1969 income taxation was
abolished for individuals and for some poor collective farms in hilly
and mountainous areas.

The leadership has claimed that the abolition of direct taxes on the
population with the concomitant improvement in public welfare was made
possible by the country's economic advance based on the Party's correct
revolutionary policy, and it contrasted the progressive nature of this
measure with an alleged intensification of exploitation and misery of
workers in what are officially called imperialist and modern-revisionist
countries. This comparison ignores the existence of the turnover tax,
which is particularly heavy on consumer goods, and of the enterprise
profits deduction, both of which are reflected in the sales price of
commodities and, consequently, represent a hidden form of sales taxes.
This method of taxation is known to be regressive, in that it takes no
account of differences in income and places the heaviest burden on those
least able to pay.

The published budget laws usually specify the amount of revenue to be
derived from the socialized economy, including collective farms and
cooperative enterprises. The proportion of this revenue was reported to
have been 85.5 percent in 1960 and from 88 to 89 percent in the 1968-70
period. This information cannot be reconciled with the published revenue
statistics, particularly with the data concerning the taxation of
noncollectivized farm enterprises, the proceeds from which were reported
to be less than 0.5 percent in 1964. The revenue from the nonsocialized
sector consists mostly of taxes imposed on the output from personal farm
plots of collective and state farm workers and, to a lesser extent, of
taxes on some private artisan and other activities still tolerated by
the government within narrowly prescribed limits.

Information on budgetary expenditures is also incomplete. Published
statistics failed to specify the use of 17.5 percent of the total
outlays in the 1960-65 period, and no explanation is readily at hand for
the decline of the unallocated residue from that level to between 3 and
4 percent in 1968-70. The published data included outlays for the
nat