Two puzzles raised VAT

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The increase in value added tax that will increase inflation and weaken the production — a typical product of putinomics. Solution it random, but always have beneficiaries.

The increase in VAT from 18% to 20% not caused, in contrast to pension innovations or particular disputes, any falling ratings guidelines. the state Duma easily approved the draft in first reading, and any failures in its further passage through the instance no one is waiting.
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Meanwhile, trouble this increased tax will begin to harm people much faster than the pension reform, the proposed introduction of which still will take many years, and the circle of victims will therefore expand only gradually.

But the new taxes will hit soon (1 January 2019) and for all. The authorities do not hide that the year ahead sees them as a cost hard on overcoming the problems created by this new tax.

Consumer prices are expected to increase from 2.5% last year to 4-4,5% in 2019 In the fight against inflation, the Central Bank will probably no longer reduce the interest rate, and loans will therefore remain relatively expensive. GDP growth, as suggested by the Ministry, will decrease to 1.4%. Real disposable income will stagnate and real wages, though increased, but slightly.

These are estimations that may even be too optimistic. And this innovation falls on the head when, by the standards of putinomics, in the Russian economy are bearable. GDP growth in the first half of 2018 (assuming a year-on-year), it is possible to reach 2%. The budget is in surplus, ie lack of money. Real disposable money incomes in January—may were 2% higher than a year ago, and real wages — by as much as 9%.

Of course, the main reason for this jump in wealth was a pre-election increase of salaries of state employees. But in the private sector earnings also grew, albeit not as markedly.

Not visible there are no objective reasons to pick it up and start to rock the economic boat.

Why do the authorities suddenly need those extensions, more than 600 billion rubles a year?

It is sometimes said that a portion of the extracted money will go to increase pensions, to season the start of the great reforms.

But the main focus of spending, as you can understand, will be the implementation of the “may decree”, which ordered to find incremental funds for education, roads, medicine, and other beneficial things to people. That is money taken from ordinary people (because the business will shift the bulk of losses from the new VAT on them, increasing the prices of goods) will then state hand returned to citizens in the form of our the world’s most expensive roads and schools, cooked in cleansing as a salt of the spotlight.

The efficiency of public investments is very low. But a gift horse in the teeth do not look, even if it is purchased with seized money from you.

The financing requirements of the “may decree” requires, according to preliminary calculations, plus 8 trillion rubles for six. Increased VAT can give during these same years, as expected, the 3.5—4 trillion rubles, i.e. approximately half of this amount. The rest will seek other ways — probably similar to this. After all, to transfer any costs from the power unit on social and no one thinks.

Sense economically harmful events, therefore, clear: to implement without delay the highest order, no matter how costly it may be, but without touching other costs, under the highest patronage.

However, there remain two questions. Why the law on the VAT rise is moving almost simultaneously with the project of increasing the retirement age, though the connection between them seem to be there? And why is the business that either directly or indirectly (via the decrease in sales, for example) will suffer still from the growth of VAT, almost no grumbling even allowed in our framework?

The first question is easy to answer. The above-mentioned synchronicity — the memory that originally they really were in the bundle.

“Our advice has not been heeded. We proposed tax reform… We have offered to reduce insurance premiums up to 22%. And just in order to compensate for these losses, to increase VAT. We wanted to reduce the tax burden on the wage Fund to rehabilitate the economy, to make it more competitive… unfortunately, half of our proposals has passed, the rest got lost along the way… I don’t really understand why colleagues in an environment of low economic growth increases the tax burden. In my opinion, this is not a good decision.”

Vladimir Nazarov, one of the ideologists of the Ministry of Finance, which castigated as the author of the pension reform, tries to explain that it was designed differently and included, inter alia, the increase in VAT in exchange for a sharp reduction in insurance premiums (pension and other) from the current 30% to 22% of payroll.

Not seeing the obvious disadvantages of this maneuver for ordinary citizens and not by assessing the realism of hope for the whitewashing of the economy, the expectations of hostingsite agree that this option was at least some logic.

But, as is usual, from it snatched that urgently needed authorities, rejecting everything else. But the designer remains only to complain about the late growth of the tax burden, loyally protecting the “pension reform” turned into a parody of what he invented. Such is the fate of our sislibov. Voluntarily responsible for putinomics, not agreeing in words with basic patterns.

Now for the second riddle of the new VAT on silence business. Not analyzing the points, I would say that it is not in the same conformism. Many of them will become or hope to become beneficiaries of this event.

After all, the value added tax falls on all goods and services. In addition, many products (such as everyday food) are taxed at the preferential rate of ten percent. If you know what you want, then tax innovations it is possible to turn in its favor — especially in the confusion in which they are embedded.

One example. The Ministry of agriculture already offers to cancel the preferential rate for products containing milk fat substitute (it is clearly about palm oil) and to impose in full.

Graceful turns this chetyrehrazovoe. First impose an embargo on imports of benign and competitive dairy products from Europe. Then, as a consolation, organize the import of substitutes from overseas. Now, to save people from these surrogates, I want to remove them, unlike other foods, the VAT exemption. And finally, prepare to raise the standard, non-concessional VAT, in order to make these import products non-competitive and free market for questionable products our home lobbyists. To whom war and to whom mother is native, as a once said on another occasion.

Who said that our economic system is not working? Works, clanking all your gears. Plus the money will flow to the Treasury. Beneficiaries will be richer. New public projects will receive funding. Meanwhile, the General public, not accustomed we have some reason to delve into the intricacies of taxation, will pay for this grace from his pocket.

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