Lyudmila Novikova
The Government redistributes taxes in favour of the regions
The regions will be able to cover budget losses from the easing of the tax burden on enterprises at 100 billion roubles. Prime Minister Vladimir Putin announced at a conference in Yaroslavl that the regions will get 0.5% more from the profit tax and 40% of the excise duties on petrol and oil, receiving about 105 billion roubles of additional revenue. Experts say, though, that far more will be needed to cover the regions' losses.
As is known, two weeks ago, the Government approved several measures to ease the taxes for business: the profit tax was reduced from 24% to 20% at the expense of the federal part of the tax (reduced from 6.5% to 2.5%), and the bonus depreciation was increased from 10% to 30%. The regions have been allowed to lower the tax on small businesses, which use a facilitated taxation system, from 15% of the profit to 5%. The tax measures approved by Parliament will come into effect on January 1, 2009. According to the Ministry of Finance, the total revenue shortfall is estimated at 550 billion roubles, with the federal budget projected to lose more than 400 billion rules and the regional budgets nearly 100 billion roubles.
The Government has decided what to do to fill the gap in the regional budgets: yesterday, Mr Putin suggested redistributing several taxes in favour of the regions.
The Government intends to give the regions 0.5% more of the profit tax (resulting in an 18% regional tax) and 100% of the excise duties on petrol and oil (today the regions have 60% of the excise duties). The Government says the increase in the profit tax will give the regions an additional 50 billion roubles, while the revenue from the added 40% of the excise duties on petrol and oil will reach 53-54 billion roubles.
"All of this has been calculated based on the current macroeconomic situation," the Prime Minister said. If this does not cover the regions' losses, Mr Putin promised to find other solutions. "The regions will get exactly the revenue shortfall amount," he emphasised.
Meanwhile, experts point to officials' miscalculations. According to Igor Nikolayev, a partner in FBK, the announced sum is seriously overestimated. "The Government calculated the revenue shortfall from the profit tax using the profit amount of recent years," said the expert, "but next year, the figures will be lower because the number of loss-making enterprises will rise." He indicated that during the 1998 financial crisis, 53% of enterprises were loss-making, while in 2007, a year of economic growth, their share was only half that figure. There is a risk of revenue shortfall from petrol and oil because of declining demand, warns Sergei Shapovalov, a partner in the Nalogovaya Pomoshch company.
