Putin’s promises will offer to pay for the population

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Обещания Путина предложат оплатить населению

The tax burden on Russia’s population can be dramatically increased. In particular, through income tax on individuals. Specific measures of tax changes were discussed at the meeting with Prime Minister Dmitry Medvedev almost immediately after the election of the President of the Russian Federation. On Thursday, March 22, reported “Vedomosti”.

According to the publication, the authorities consider the following steps:

— increase personal income tax by 2 percentage points to 15%, with the introduction of non-taxable minimum;

— the introduction of the sales tax turnover (close to sales tax) when reduction of insurance premiums: Ministry of Finance wants to reduce too high a load on the work, and such a maneuver, according to the Agency, will help to move the business out of the shadows;

— the abolition of the preferential VAT rate of 10%, which now applies to food, products for children and medicines (by 2020 the loss of the benefits, the Finance Ministry estimates, will reach 600 billion per year);

— introduction (instead of preferential VAT rates), direct subsidies from the budget for poor families and a complete overhaul of the benefits to combine numerous social benefits into a single universal benefit for the poor.

In the opinion of the Cabinet, these measures are aimed at execution of orders that the President of the Russian Federation Vladimir Putin gave at the end of his address to the Federal Assembly. In it, we will remind, the head of state promised to build a fair and stimulating tax system, and make social support in General more targeted.

As the “Vedomosti”, the tax changes need for additional revenues, as in the message Vladimir Putin has declared about the growth of spending on health and infrastructure.

ROSBANK in the survey “Russia after the elections” have estimated the cost of reforms: 20.5 trillion. rubles in the period 2018-2024 years. According to economists, these funds can be sought through the reduction of social spending — 7.8 trillion. rubles, and defense spending 6 trillion. rubles, increasing revenues by 4 trillion. rubles and the weakening of the fiscal rules, which will provide 2.7 trillion. rubles.

Tax reform will allow to kill “two birds” from the list: to reduce social spending and increase revenues. As previously explained the assistant to the President Andrei Belousov, about two thirds of the 1.5% of GDP that will be required for the implementation of the instructions of Vladimir Putin, will be obtained by accelerating economic growth and the rest through savings.

Of course, not the fact that all the innovations that were discussed, Medvedev, will be implemented. As stated by the press Secretary, Natalya Timakova, “the government discussed various measures, but they still only proposals.” However, the trend in the new government planned quite clear. And he does not inspire optimism.

— If the Cabinet will increase personal income tax to 15%, and the abolition of preferential VAT rate, the average citizen is not particularly notice it — said the Chairman of Russian economic society. SF Sharapova, Professor of international Finance (University) Valentin Katasonov. On the other hand, if the bar of personal income tax will rise to 20% – it will be very noticeable and very serious.

Notice, my discussion in the government on the income tax surprise. So I want to ask: when the members of the Cabinet speak the remnants of conscience? It is clear that Russia needs a progressive income tax. Just because the oligarch Roman Abramovich and some peasant from the provinces don’t have to pay tax at the same rate. This “equality” no other country in the world!

“SP”: — That may present a single universal benefit for the poor, which was discussed at a meeting with Medvedev?

— I think government experts reading about the experiments that are now in Europe. We are talking about basic income basic income. Now the EU has an extensive system of social allowances, preferences and privileges. It is proposed to cancel, and to distribute to the needy regardless of age and health status — the same BAUD.

But you have to understand: the EU is scheduled to start benefits, which will provide a living wage. In Europe the minimum is calculated so that it is possible to really live, not survive.

In Russia the living wage is a ticket to poverty. I do not exclude that in the end a single benefit for the poor in Russia will be reduced to a symbolic payment of 2-3 thousand rubles per month per person — and that’s all. Due to cuts in other social payments and benefits, the budget of the Russian Federation will save.

“SP”: — How effective such measures from the point of view of economic development?

The government, as predicted by many experts, begins after the election to tighten the screws. On the one hand, it intends to sequester the social spending and raise taxes to both individuals and legal entities.

Notice all the “hot” issues of the President Putin in his Message neatly avoided: the question of income tax and control of transboundary movement of capital, and the problem of offshore tax evasion. In my opinion, the money to lift the economy, Russia should look for just on foreign direction.

From the data of the Central Bank on the balance of payments of the Russian Federation for the first two months of 2018 well you can see what the hole has in the Russian economy.

Judge for yourself: the net capital outflow for the period increased more than 2 times in comparison with January-February 2017 — it amounted to $ 29.6 billion Economic bloc of the government assured us that the adoption of measures to encourage repatriation of capital, will close this issue. But, as you can see, these measures do not work.

Overall, by my count, only for 2017 from Russia was derived $106 billion.

Separate question — where capital flees from Russia. Worldwide offshore jurisdictions now shrink as shagreen. In my opinion, a significant part of fugitive capital is, in the end, in the United States.

This means, Russia could lose those trillions of dollars placed abroad.

We need to get our money back from abroad, and to put a barrier to capital flight to the West until later. But our Cabinet does not see like this problem. The Russian government, I think, it is easier to collect the extra penny from the citizens, increasing the income tax than to return from abroad billions of dollars. And where to take us to such a policy remains an open question.

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