Putin's aide says VAT might be cut to 12-13 per cent
RIA-Novosti
Moscow, 8 February: The head of the Russian president's expert department, Arkadiy Dvorkovich, has spoken in detail about tasks set by Vladimir Putin at today's session of the State Council. He mentioned a possible reduction in VAT and promised to announce concrete anti-corruption measures soon. (passage omitted)
Speaking about debureaucratization of the country, Dvorkovich told journalists: "The measures are clear; I think they will be adopted in the near future." He said the first wave of such measures came in 2000, when the number of activities subject to obligatory licensing dropped. However, there has been no radical change in the situation. "Bribes have become even bigger... Quite tough measures will be taken," Dvorkovich said.
Reforms will continue
State governing efficiency will be achieved through measures which were drawn up but not implemented during the 2004 administrative reform, Dvorkovich said.
"We have a lot to do. This concerns resources, first of all, because they all stayed in one ministry," he said.
He said that nothing would change under such centralization. "On the federal level, we need a clear system to support execution of powers and to transfer resources to the lower level," he said.
The Ministry of Economic Development and Trade to stay
Dvorkovich denied media rumours that the Ministry of Economic Development and Trade would probably be disbanded.
"I have no information about this. The ministry's heads certainly have no such wishes," he said. (passage omitted)
Dvorkovich noted that in principle certain reorganization in redistribution of powers is possible but this will concern more other ministries rather than the MEDT.
Small business will help us
Speaking about labour productivity, which was one of the key subjects in the president's speech at the State Council, Dvorkovich noted the need to "modernize existing businesses and create new high-productivity jobs".
He also noted that at the same time conditions must be created for small businesses. With rising labour productivity, job cuts may lead to higher unemployment, Dvorkovich said.
New jobs could be provided by small businesses and they must be supported, Dvorkovich said. "This problem should be dealt with by governors and mayors: they must do everything to attract investors who will build new plants, and also to develop small and medium-size businesses."
We will help business
One of the most vital question for business is tax burden. Putin suggested that VAT could be reduced to "the lowest level", without mentioning the figure, and the two-tier system, whereby VAT on some socially important products stands at 10 per cent and at 18 per cent for other products, be abolished.
Dvorkovich said VAT could be reduced to 12-13 per cent.
A cut to 16, 15 or even 14 per cent is pointless because it will change nothing from the point of view of stimulating the paying of VAT, nor will it change the general nature of management, Dvorkovich said. At the same time, he continued, a sudden cut to 10 per cent is very risky.
Debates around VAT, the main source of the budget's income, has been going on in the government for several years now. Earlier, Dvorkovich suggested that this tax should be abolished altogether and replaced with sales tax. Former Prime Minister Mikhail Fradkov thought it should be reduced to 13 per cent. The main opponent of a sharp cut in VAT is Finance Minister Aleksey Kudrin, who said today that VAT would be reduced by 2020 but only when the authorities are sure that this step will not affect negatively the budget balance.
Dvorkovich did not mention the date either. He said the government was still working on calculating the rate and determining the date of its introduction.