Finance minister promises tax reform, to keep tax burden flat

MOSCOW, Mar 27 (PRIME) -- The Finance Ministry will prepare proposals to change the taxation system without changing the overall tax burden, because higher spending of energy revenue or raising taxes on the non-energy sector is impossible, Minister Anton Siluanov said at a widened meeting of his ministry on Tuesday.

“The fine-tuning proposals will be prepared taking the fiscal neutrality principle into consideration, meaning taking permanency of the overall taxation burden for the budget as priority,” Siluanov said.

“The changes must aim at creation of fair competitive conditions for economic development, which means in favor of fair corporate taxpayers.”

Siluanov said referring to additional spending of energy revenue and raising taxes for non-energy producers, “This will only result in slowing down the economic development and in creation of macroeconomic risks. We have done that before.”

“The tax changes envisage higher profit of organizations, growth of investment and higher labor productivity and under estimates, will help raise investment possibilities of the economy by 1% of the GDP,” Siluanov said.

Siluanov said that the use of gray schemes to take capital abroad has fallen to almost zero. “At the start of the six-year period, about 2% of GDP were taken from the economy by gray schemes of capital flight, now this figure is close to zero. This is a result of the banking sector purge and building of a comfortable infrastructure of own financial market.”

He reiterated that support of infrastructure, healthcare, education and poverty reduction are among the priorities of Russia’s budget spending. Social support must be fair and targeted, Siluanov said, adding that two thirds of the current tax preferences are given to wealthy people.

Russia would raise the pension-to-salary ratio by 10–20 percentage points by introduction of individual pension capital, Siluanov said.

The minister separately said that the current level of digital technologies creates room for reduction of the number of state employees.

Prime Minister Dmitry Medvedev said that the tax system must meet the needs of the economy and that discussion of its reforms will continue.

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