MOSCOW, Apr 18 (PRIME) -- Russian Prime Minister Dmitry Medvedev on Tuesday ordered the government to calculate the consequences of cancelling value-added tax (VAT) discounts on all types of goods for the budget and consumers, Vedomosti business daily reported on Wednesday quoting government officials.
The government is discussing cancellation of the VAT discount to increase targeted social support under President Vladimir Putin’s latest address to the Federal Assembly, both parliament chambers. The Tuesday meeting of the government discussed inefficiency of the VAT discounts, Vedomosti reported.
The baseline VAT rate for all goods stands at 18%, but the government collects VAT of 10% from food excluding delicacy foods, from children goods, books, school books, and medicines. The official calculated the cost of the VAT discounts stands at 550 billion rubles in 2017, or about 0.6% of the country’s gross domestic product, the business daily said.
This cost will rise to 600 billion rubles in 2018 and to almost 650 billion rubles in 2019, Vedomosti reported quoting the official.
In 2016, the Finance Ministry suggested boosting the discount to 12% in 2017 and increasing the rate by 2 percentage points per year starting from 2019 until it equals the baseline 18% rate. The ministry also suggested allocation of 1,500 rubles per month to the poorest people to compensate the increase.
The official told Vedomosti that the discount may stay only for medicines and food, and the government may simultaneously introduce targeted subsidies.
(61.1454 rubles –U.S. $1)
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