President Mikhail S. Gorbachev, seeking to cushion the blow of huge price increases, gave Soviet citizens a gift Saturday: a fat pay raise and a 40 percent increase in everyone's bank account.
The presidential decrees, announced on state television's evening newscast, were intended as partial compensation for a sudden jump in consumer prices that will occur April 2.On that date, government-set prices on food, clothing, furniture, electronics and scores of other items will shoot up 2.5 to 10 times. Many of the current prices are heavily subsidized and have barely risen in 30 years.
The first of Saturday's twin decrees cut the tax on profits of Soviet factories, farms and other enterprises from 45 percent to 35 percent. In return for lower taxes, however, they will be expected to raise wages, which the decree said would jump to $850 a month for the average production worker.
The average Soviet wage is now $480 a month, although factory workers generally earn more.
But the television announcement left many questions unanswered. Among the chief ones are how the changes will affect foreign firms, joint ventures and Soviet cooperatives that are essentially private businesses.
More fundamentally, it was unclear what economic benefit Gorbachev hopes to gain from such large, nearly simultaneous increases in wages, prices and savings.