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Putin pledges more Russia reforms, tax cuts
By Patrick Lannin
MOSCOW, Oct 30 (Reuters) - President Vladimir Putin pledged on Tuesday he would push ahead with further reforms and tax cuts, adding to steps which have already made Russia one of the few bright spots on the world economic scene.
Russia, an economic pariah just three years ago when it underwent a huge financial crisis, has been praised for making great progress in reforms since then, and is now one of the few countries in the world actually showing strong growth.
Putin told a gathering of businessmen and economists at a meeting of the World Economic Forum (WEF), best known for its annual gathering in the Swiss resort town of Davos, that his aim was to modernise and liberalise the economy.
"We will further develop the pace and quality of reform," he told the WEF meeting, holding a two-day session on Russia.
"The first direction (of change) is a further reform of the tax regime," he added. "At the present time, maybe it is a little premature to speak about it, we are thinking about cutting a few taxes, including such taxes as VAT."
Russia's value added tax (VAT) is 20 percent, with the exception of some food stuffs, which are taxed at 10 percent.
Putin said he would make further efforts to get his nation in to global trade body the World Trade Organisation (WTO) and continue cooperation with international lenders such as the IMF and the Paris Club of sovereign lenders.
He said the country could turn to interenational lenders for help lenders if the economy suffered a sharp slowdown, but emphasised that Moscow planned to meet its debt obligations.
TAX CHANGES KEY PART OF REFORMS
A senior Finance Ministry official said the VAT rate could be cut to as low as 16-17 percent.
"I think that we could make such proposals to the Duma (lower house of parliament) next year," Deputy Finance Minister Sergei Shatalov told the meeting.
He said the government planned other tax moves including the ending in 2004 of a tax levied on sales of consumer goods, which he said could not exist at the same time as VAT.
VAT is key for the Russian budget, expected to bring in some 700 billion roubles ($23.58 billion) next year, or 40 percent of revenues.
Russian growth this year is expected at more than 5.5 percent after a record 8.3 percent last year. Russia is the world's second biggest oil exporter and high crude prices have until recently given the economy an obvious boost, but the government says the expansion is more wider based than the energy sector.
It says the economic boost has come from easing taxes. This has included the introduction of a flat income tax of 13 percent and a cut in corporate tax to between 25 and 30 percent.
As well as further easing of the tax burden, Putin said his government would concentrate on legal reforms and the lowering of bureaucratic hurdles to business.
He also said he backed making the agricultural sector, which is enjoying a bumper harvest this year, more market oriented.
Putin last week signed into law a new land code that lifts a Soviet-era ban on land ownership, but but this does not apply to farm land, which has long been a sensitive issue.
"All this is needed to create a modern and mobile economy," Putin said of his reform agenda.
(Additional reporting by Darya Korsunskaya)
($1-29.68 Rouble)
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