Media Review

7 march, 2012 13:23

Izvestia (Moscow edition): “The Authorities Opt Not To Increase Taxes”

Tax rates will be frozen – that is the result of a meeting conducted by Dmitry Medvedev and Vladimir Putin.

Tax rates will be frozen – that is the result of a meeting conducted by Dmitry Medvedev and Vladimir Putin.

The insurance contribution rate will be frozen at the current level and other taxes are not going to be increased either. This is the outcome of a closed meeting on improving the tax system chaired by current president Dmitry Medvedev, presidential aide Arkady Dvorkovich told Izvestia daily. The meeting was attended by President-elect Vladimir Putin, First Deputy Prime Minister Igor Shuvalov, Head of the Presidential Executive Office Sergei Ivanov, presidential aide Arkady Dvorkovich, presidential advisor Mikhail Abyzov, Minister of Health and Social Development Tatyana Golikova, Minister of Economic Development Elvira Nabiullina, Minister of Finance Anton Siluanov, Head of the Federal Customs Service Andrei Belyaninov, Head of the Federal Tax Service Mikhail Mishustin and Chairman of the State Duma Committee on Budget and Taxes Andrei Makarov. The idea to keep taxes at the current level came from the Ministry of Finance. In an interview with Izvestia, Finance Minister Anton Siluanov said his ministry had concluded that raising insurance contribution rates from 26 to 30% last year had had a negative impact on business, as evidenced, among other things, by a drop in the personal income tax collected. At the height of the crisis in 2009 this figure was 4.29% of GDP, in 2010 it fell to 3.96%, while in 2011 it was down to 3.67%. The Ministry’s stance on the issue is now supported both by the Prime Minister and the President.

“Three major decisions were taken at the meeting following on from the discussion, Andrei Makarov told Izvestia. “The first is the commitment not to increase the tax burden. Secondly, taxation policies should be set for the long term so that businesses can plan their operations in advance. Except, of course, when those changes are beneficial for business. And thirdly, a reserve was found for increasing tax collection associated with improving tax administration.”

Furthermore, a decision was taken on cancelling the Unified tax on imputed income – this will now not happen until 2018. Previously there were plans to drop the tax in 2014. According to Andrei Makarov, the necessary amendments will be prepared and submitted to the State Duma within a month. The Ministry’s bill on cancelling the Unified tax on imputed income from 2014 passed its first reading in the State Duma last year and immediately caused indignation among businesspeople. Small businesses even staged protests in some regions.

“This is a huge achievement for small businesses,” Makarov concluded. “They will have a choice – either switch to a patent or keep on paying the nified tax on imputed income.”

According to Opora Russia, about half of small businesses and entrepreneurs pay the Unified tax on imputed income, which they find very convenient since by paying that one tax they do not have to pay any other taxes. Accounting and taxation for “Unified-taxers” is simplified, and they are not obliged to purchase and maintain a cash register.

Alexandra Bayazitova