Dmitry Medvedev will address a meeting of the Government Presidium
The President has decided to personally present his budget proposal to the Federal Assembly at a meeting of the Government Presidium. Dmitry Medvedev did not reveal the details of the upcoming proposal, but the most important member of the audience, Prime Minister Vladimir Putin, has already unveiled some details during his visit to the Astrakhan Region last week.
Mr Medvedev said at a meeting on the preparation of the budget proposal on April 30th that he wants to personally submit his proposal to the Government Presidium. In the past, the budget proposal, which, according to the budget code, lays down the guidelines of budgetary policy for the next year and in the medium term, was simply sent in written form to Parliament and then introduced by the Presidential economics advisor. Dmitry Medvedev explained that the new procedure "would contribute to explaining some of its positions and lend it more weight."
The President's press secretary, Natalya Timakova, recalled that "previously the budget proposal was an elaboration of the economic positions the President set forth in his Address to the Federal Assembly....Because this year the address is scheduled for the autumn, the President deemed it necessary to personally emphasize some of the budget proposal's main points."
Kommersant's sources at the Kremlin explained that the speech to the Presidium would be a "report to draw the Government's attention to what he (the President - Kommersant) considers to be the priorities." As the President said, the budget proposal should be ready "some time by the middle of May."
The Government is not waiting until Dmitry Medvedev publishes the main principles of the 2010 budget. As early as April 29, Prime Minister Putin chaired both the first meeting of the Budgetary Projections Commission in Moscow and an April 30th extended session of the Presidium of the Local Government Development Council in Astrakhan.
These two meetings designated the tasks for the Finance Ministry in preparing the budget. On both occasions, Mr Putin emphasized the need to concentrate on the regional and municipal budgets. He stated in Astrakhan that "municipal revenues dropped an average of 11% during the first quarter compared with the same period of 2008." This is the average figure for budgets at all levels of government.
The Finance Ministry announced on April 28th that federal budget revenues from January to March 2009 had dropped by 202.6 billion roubles, or 10.5% compared with the same period of 2008. Regional governments saw the most dramatic drop in revenue. According to Deputy Finance Minister Anton Siluanov, regional government revenues are 13.5% short of target levels, due to a sharp drop in revenue from taxes on profit.
Both in Moscow and Astrakhan, Vladimir Putin emphasized the need to focus on municipal revenues, arguing that their revenues are shrinking because "the tax base of the local governments is still inadequate" and "transfers between budgets in 2009 account for more than 31% of the total local budget revenues, not counting the money granted to finance the delegated powers."
However, the fact that the Prime Minister specifically mentioned the issue does not mean that transfers from the federal budget will increase. Municipal government revenues will come from people registered in these municipalities. In Astrakhan, the Prime Minister said that the Government had agreed to accelerate the enactment of a local tax on real estate, which was "created to replace the current land tax and property tax....Local budget tax revenues must increase considerably, I very much count on this".
The meeting of the Commission on Budget Projections decided to introduce the new tax as early as 2010. Vladimir Putin affirmed that "this is not about raising tax rates, but about redistributing the tax burden on people's real estate, and the creation of benefits for the vulnerable and owners of inexpensive property."
Another source of municipal tax revenues, which the Prime Minister has yet to support publicly but has been mentioned by the Finance Ministry, is the increase in transportation tax. "We have proposed giving the regional authorities more autonomy in setting rates for taxes on transportation," Ilya Trunin, director of the Tax and Customs Tariff Policy Department of the Finance Ministry, said in late April. Local authorities, he said, could vary the rates depending on the vehicle age and its environmental friendliness.
Irina Granik; Pyotr Netreba
