The President of Russia Vladimir Putin has approved a record since 2012 a plan to increase government spending 10 trillion rubles will be poured into the Russian economy for 6 years, hoping to get her out of stagnation and to restart economic growth.
As reports Bloomberg with reference to sources, Putin formalizes an economic plan in the form of decree which will be signed immediately after the inauguration on 7 may.
Fixed in the decree of the measures will be aimed at a “decisive breakthrough” in improving the quality of life, which Putin announced in his address to the Federal Assembly in March, the sources said on condition of anonymity.
The additional cost will go to infrastructure construction, health care and development of the education system.
Despite calls to stimulate private investment, most of the measures in the new “may decrees” Putin will be the state, the sources said.
According to them, the total amount of expenses necessary for budgetary manoeuvre, and the means of financing are unlikely to be marked in the decree.
Sources of financing not yet completely defined: some expenses can be paid for by cuts elsewhere in the budget, including defense, for the rest will probably have to increase taxes.
In particular, we discuss the possibility of introducing a 4 percent sales tax, according to sources Bloomberg. It will be levied on the turnover of enterprises and will complement the VAT, which operates on the same principle with a basic rate of 18%.
Another option is to improve yourself VAT to 22%. An appropriate plan under discussion in the government since last summer.
A third option is to cancel the preferential VAT rate, which now applies to commodities. 10% VAT instead of 18% is levied on food sales (excluding specialities), medicines, products for children and textbooks.
According to “Vedomosti”, the meeting with the head of the government Dmitry Medvedev in April, this tax regime was found to be ineffective, and the relevant agencies were instructed to calculate the consequences of its liquidation.
At the same time the government is discussing the possibility of raising income tax for individuals from the current 13% to 15%, announced on March 22 the first Deputy Prime Minister Arkady Dvorkovich.
“13% is not a fetish, it is no different from 14% or 15%” – has explained Dvorkovich.- We lived with 13% tax on long enough and if the additional 2% will be sent for example on health, it would definitely be a plus”.
All measures are to increase the tax burden on the population, said Alexandra Suslina of the economic Expert group: Putin’s promises to boost economic growth, to increase spending on human capital and to halve the poverty level will pay from their own pockets the Russians themselves, of which more than half receive less per month 25 thousand rubles, and a third are under 15.
Especially painful blow will be a simultaneous increase in personal income tax and the VAT continues Suslin: the first step will reduce wages, while the second will raise prices because of the VAT incorporated in the price of all goods and services.