UPDATE: Deputy PM: Russia govt prepares no economic revolution

(Adds details on taxes after third paragraph)

MOSCOW, Mar 22 (PRIME) -- The government has no revolutionary economic plans because Russia in moving in the right direction, Deputy Prime Minister Arkady Dvorkovich told students of the Plekhanov Russian University of Economics on Thursday.

“We have no intention to make any revolutionary moves in our economic policy,” he said.

“We have problems here and there, but we think that we are moving mainly in the right direction. The president said that clearly in his recent address to the Federal Assembly, talking to Russian citizens in general as well.”

Dvorkovich also said that Russia can raise the personal income tax by 2 percentage points to 15% if authorities find the decision reasonable. He said that the government has been considering changes in the tax policy for a long time and added that the issue needs to be discussed and calculated thoroughly.

Vedomosti business daily reported citing federal officials that an idea to raise the tax was discussed at the first government meeting after the March 18 presidential elections. The government is discussing various suggestions on this subject, prime minister’s spokeswoman Natalya Timakova told the daily.

Dvorkovich said, “The figure of 13% is not a fetish, it is not different from 14% or 15%...If we understand that new approaches are fair compared to existing ones, if there is a public consensus …then I see nothing scary in that. We have lived with the tax of 13% for quite a long time and can allocate additional 2% on healthcare, for instance.”

Dmitry Kulikov, an expert at the research and forecast group of the Analytical Credit Rating Agency (ACRA), told PRIME that the tax increase to 15% from 13% would add about 0.3–0.5% of gross domestic product (GDP) to Russia’s budget revenue. “At present, the personal income tax provides 10–11% of revenue of the consolidated budget. If the rate rises by 2 percentage points, it may increase the revenue by 0.3–0.5% of GDP depending on the amount of non-taxed income,” he said.

Dvorkovich also said that many government officials and representatives of the oil industry are against the Finance Ministry’s suggestion to complete the oil industry tax reform to reduce the chance of tax evasion.

Alexei Sazanov, director of the ministry’s tax department, said on Wednesday, that the authority suggested completing tax maneuver, abolishing oil and oil product export duties, and raising the mineral extraction tax (MET) on oil and gas condensate equivalently to the reduction of the export duties.

Dvorkovich said, “If we do the maneuver, we will have to cut excises, and the measure does not lead to any good results as participants of the market and representatives of other ministries think. The whole tax burden will fall on shoulders of non-vertically integrated oil refineries and partially on Belarus.” The government should discuss the issue after the program for upgrades of oil refineries has finished, he added.

End