Prime Minister Vladimir Putin held the first meeting on drafting the federal budget for 2012-2014. This scenario provides for possible reduction in the budget shortfall to 1%-1.5% over the three year period. However, much will depend on the government's decisions on insurance contributions.
Before June 20, the government will determine the major parameters of the budget, proceeding from the list of spending priorities, including social sector, energy conservation, agriculture, nuclear power and space programmes.
"We must support the qualitative growth of the economy and innovate production, and also enhance the potential of our research and educational centers," Putin said.
All these expenses must be linked with a reduction in the budget deficit. The world oil market may facilitate these opposing objectives. Deputy Prime Minister and Finance Minister Alexei Kudrin said that revenues are expected to reach 10,318 trillion roubles next year and 11,289 trillion in 2013. If oil prices remain at the same level in 2012, the deficit may constitute a mere 1% or 1.5% of the GDP, Kudrin promised.
"Now we have to decide is we should spend all this revenue," he noted. "Oil and gas revenue will increase by 402 billion roubles and non-oil and gas revenue by 413 billion roubles. We will determine the ratio of spending accordingly."
A little earlier Deputy Finance Minister Tatyana Nesterenko spoke about the decision to adhere to the following principle: all additional non-oil and gas revenue can be channeled into expenditures, whereas oil and gas revenue will be used to decrease the budget shortfall and replenish the Reserve Fund. "It is perfectly clear that given this approach, the already announced commitments will not be balanced by these revenues," she emphasised. In different estimates, the arising "imbalance" may be "from 200 billion roubles in 2012 to one trillion roubles in 2014."
An increase in excise duties on tobacco and alcohol will replenish Russia's wallet with an additional 8 billion roubles in 2012 and 59 billion roubles in 2013. Kudrin admitted that his ministry has not yet decided how it will increase the mineral extraction tax. It has not yet made a decision on insurance contributions, either. "We are still working on insurance contributions but have not yet made a decision on them because this is a difficult issue," the minister explained.
He said that if the rate is decreased and the tax scale is increased, the tax burden for business will not be reduced but merely redistributed. According to his ministry, if the tax scale is increased to 1.5 million roubles and the rate is decreased to 28.5% (against the current 34%), insurance contributions will be balanced out, but if the rate is further decreased, this will result in a shortfall in income and a general deficit in the pension system.
President Dmitry Medvedev demanded that the government resolve the issue of contributions (and probably even bring them back to the previous level) paid by employers from the salary fund. Participants in the recent meeting at the White House did not make an unequivocal decision, but the majority of them favoured the idea of reducing the amount of contributions only for small non-trade companies. However, Medvedev told Kudrin after this meeting that a facelift is pointless and if the rates are to be reduced it should concern everyone.
Anastasia Savinykh