Report: PM says Russia cannot close budget gap by raising taxes

MOSCOW, Sep 24 (PRIME) -- The Russian government must not solve the budget shortage issues by raising taxes or para-fiscal charges and it must have a sober approach to the amount of social support, Prime Minister Dmitry Medvedev told Rossiyskaya Gazeta in an interview released late Wednesday.

“We must not solve the budgetary issues by raising fiscal burden in the conditions of economic growth slowdown. We decided that taxes will not be changed upwards over the next several years (they, albeit selectively, can decrease and this is possibly already happening, already discussed),” Medvedev said.

Previously, the Finance Ministry proposed raising the mineral extraction tax (MET) on oil in 2016, and also retaining high oil export duty.

The prime minister said that the key government’s target is to retain low state debt and a balanced budget. Social needs and infrastructure development must be set as the top priorities in spending but the government will need to make sober estimates of the budget’s capacity for social support measures.

“The government must assess its ability to support those for whom it is difficult to adapt to new conditions honestly and without any illusions,” Medvedev said.

The economy must be prepared for a surge of the number of retired people in the future, he said.

Medvedev said he admitted that the Russian economy is ineffective and needs reforms. The official said he rules out money emission to stimulate the economic growth.

Oil prices are likely to stay low or they can become even extremely low in the future, Medvedev said.

Medvedev said separately that he sees neither a possibility of an abrupt deterioration, nor of improvement of the economic situation in Russia in the near future.

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