Russia is looking for sources of the state budget replenishment

07.02.2012 Yesterday at the tax conference that took place in Russia the Deputy of the Minister of Finance Sergey Shatalov named several important issues on taxation of the country. For example, the plan of further actions of the state if the Government refuses to increase the retirement age and change the system of free health insurance was discussed. According to this scenario, the increase of tax rates is inevitable as noted by the officials of the country. Of course, there is still the possibility to increase the national debt or sell intensively the raw materials supplies of the state, but, as experts believe, it’s not the way-out.

The Ministry of Finance states that it’s not possible now to increase direct taxes because the consequence will be a sharp slowdown of economic growth. On the other hand, indirect taxes such as VAT and excise tax also can’t be increased. The officials name the reason: Russia still can not agree with the partners of the Customs Union on excise tax on alcohol and cigarettes. In the situation of poorly controlled border with Kazakhstan there is a risk of contraband and counterfeit products from China.

During the conference the idea to increase the tax burden in the gas sector, in particular increase the tax on mineral extraction was also suggested but this idea faced with a sharp critic of experts of this sector. Sergey Shatalov agreed that “the tax formula” for “Gazprom” is really very difficult to create.  

Expert’s opinion

“The Russian Federation faced with a problem of choosing the mechanism of the state budget replenishment. Some options are just not available at the current economic situation. However, if several legislative tax reforms take place the situation can be improved.

For example, it’ll be reasonable to simplify the mechanisms to obtain benefits for innovative projects, to give incentives for investment at the financial market: to give incentives to private investors with long-term investment and abolish value added tax on all financial services and transactions with precious metals at the stock exchange, to introduce a mandatory assessment of all the bills and regulations at the terms of the potential tax burden on business.

The above mentioned ways to reduce the tax burden will attract investment flows into the country that will be a source of the state budget replenishment”.  

On the basis: www.rg.ru

Andrianova Irina ( the leading lawyer of legal support and banking consulting department of Honest&Bright)