High-tech taxman who loves hockey is Putin’s new premier

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Vladimir Putin is putting his trust in an obscure technocrat with little political experience to be prime minister and revive Russia’s flagging economy, as he prepares the country for the most significant constitutional overhaul in a generation.

Mikhail Mishustin, head of the Federal Tax Service, last held a political post in the government as a deputy tax minister for five years to 2004. Putin signed the order appointing him formally on Thursday after lawmakers in the lower house of parliament voted overwhelmingly to confirm his candidacy, with 383 in favor and none against.

His nomination won plaudits from economic reformers and business leaders, aware of his record of transforming tax collections through efficient use of modern technology and encouraged by expectations he’ll focus on boosting growth.

“Mishustin can relate to business like no one else,” said Alexei Kudrin, a former finance minister and now head of the Audit Chamber, a government watchdog. “He has a vision for the economy that I hope will lead to a modern and effective development program.”

While he’s not widely known outside of the tax authority, Mishustin developed a rapport with Putin as a member of the president’s Night Hockey League. A longtime hockey enthusiast, he sits on the supervisory board of Moscow’s CSKA club together with Igor Sechin, a Putin confidant who runs Russia’s state-run oil giant Rosneft PJSC.

The new prime minister is also an amateur musician and has penned pop songs as a hobby, including for singer Grigory Lepsveridze, who was sanctioned by the U.S. in 2013 for alleged ties to organized crime.

Mishustin, 53, led the tax service from 2010, creating a state-of-the-art system that involves real-time reporting to minimize avoidance. It helped tax payments grow far more quickly than Russia’s gross domestic product for the last five years.

‘Brave new world’

“Before, you needed a bottle of vodka to figure out your declarations,” Yandex NV Deputy Chief Executive Officer Tigran Khudaverdyan said of Mishustin’s reforms. “But now it’s a brave new world where everything is simple.”

Prior to taking over the tax authority, Mishustin spent two years as president of UFG Asset Management, a Russian investment business that was set up by U.S. investor Charles Ryan and former Finance Minister Boris Fedorov. The PhD economist also led state agencies including the federal land registry and a body responsible for managing special economic zones.

His unexpected nomination capped a day of surprises after Putin accepted the resignation of the government of the long-serving prime minister, Dmitry Medvedev, on Wednesday. Medvedev said the president needed a new team to implement the vision Putin had outlined hours earlier in his state-of-the-union address, involving sweeping constitutional changes aimed at boosting the powers of parliament and another body called the State Council.

Medvedev’s job had long been rumored to be at risk as Russia’s economy stagnated and wages shrank for five years running, helping to erode Putin’s popularity. The president also announced a raft of new spending measures that are expected to boost growth.

Mishustin told lawmakers that he will work to restore trust between business and the authorities while speeding up Putin’s National Projects infrastructure-spending program. Those initiatives stalled in the bureaucracy last year, failing to deliver the hoped-for stimulus and prompting Putin to criticize the government.

“Mishustin revolutionized tax collection in Russia, where tax evasion has long been a national sport,” said Max Nalsky, a co-founder of IiKO, one of Russia’s leading software providers for restaurants. “I can’t think of any other state agency that is as progressive in IT and digitalization.”

— Jake Rudnitsky and Evgenia Pismennaya, with assistance from Ilya Arkhipov

Bloomberg News
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