Novye Izvestia: "Tax Boom"
Michael Kalmatsky, Nikoly Dzis-Voinarovsky
The Government to change unified social tax to pension insurance contributions
Yesterday the Government gathered to discuss long-term socio-economic development through 2020. The Cabinet approved the document with some revisions, but an announced tax reform has become the main news: the unified social tax will give way to pension insurance fund contributions, which all companies are to do at the same stake - 26% of the salary fund.
The pension increase is one of the aims of Concept 2020 approved by the Cabinet yesterday, and has so far made a great impression. Prime Minister Vladimir Putin said that next year, the basic part of pension would increase by 37.1% and insurance part by 15.6%. As a result, social pension should not be less than a pensioner's cost of living. In a year, the average pension would double compared to its current amount.
"The average pension will reach triple the cost of living of a pensioner by 2020," the Prime Minister promised.
From January 2010 on, pension rights acquired before 2002 will be indexed at 10% and every year of work-time recorded before 1991 will be additionally indexed.
The Prime Minister says such measures will ensure a more just evaluation of the contribution of those who worked during the Soviet period.
Mr Putin said: "People who begin to form their pension savings after 2010 with an insurance record of work exceeding 30 years must receive no less than 40% of their salary.
It is clear that this measure will require large financial expenditure, which is why the Government is switching from the unified social tax to contributions on mandatory pension insurance at 26%. The Prime Minister said that "taking into consideration contributions on medical and social insurance, the total rate will not exceed 34% of the salary fund."
Insurance contributions will not be accounted on an annual salary of more than 415,000 roubles, but pension rights on these sums will also not be formed. "We are doing so in order to prevent the pension payments from average and small salaries from contributing to those who earn large sums," the Prime Minister said. Small businesses in the high-tech and agricultural sectors, where salaries are big and tax burden must increase, will receive some benefits. They will have a transitional period of up to five years during which tax increases will be compensated by the state budget.
"I assure you that these innovations are linked with additional expenditure for business. However, I stress that simultaneously a number of tools will be introduced to ease a total tax burden on business," Mr Putin explained, attempting to appease the audience.
The Prime Minister said National Welfare Fund resources could be involved into it.
Elvira Nabiullina, head of the Economic Development Ministry, who is in charge of developing appropriate measures with the Finance Ministry, told the press that concrete measure had not been yet developed, but it would be done. She said that as a result, the tax burden for some companies could increase, while for others it could decrease, but stressed that, as the whole, it should not increase.
Vera Kononova, deputy head of the department of analytic research of the Institute for Complex Strategic Studies, believes the measures undertaken by the Government will lead to an unequal division of tax burden.
"I can only say that the tax burden will increase for the companies which pay employees salaries between 280,000 and 415,000 roubles, because earlier, they paid the unified social tax at a reduced rate of 10%," the expert told to Novye Izvestia.
"Moreover, although the economy needs diversification, the reform will redistribute the tax burden from high-paying sectors, for example, the fuel and energy sector, to low-paying sectors like the manufacturing industry and education. The benefits offered to small high-tech business are a good thing, but it will not change the situation because small businesses make up only a small fraction of the economy. The same can be said about the benefits to the agricultural sector - they have already received benefits."
Yevgeny Gavrilenkov, professor at the High School of Economics, also believes that the main loser will be the companies that pay average salaries. "This is an increase in tax burden for an average taxpayer who cannot escape the situation. It is unlikely to increase the number of non-transparent salaries in the economy, because once such companies are put in the spotlight, it will be difficult to hide in the shadow from tax inspectors," the expert told Novye Izvestia.
