Vedomosti learned about the proposal to Putin to abandon the tax reform
The government believes that changes in taxation can result in problems for the economy.
According to the newspaper “Vedomosti”, citing a government report to the President, the Cabinet discussed the proposal of Vladimir Putin to define the contours of tax reform and prepare the adoption of relevant laws. During the discussion the Ministry of Finance proposed tax maneuver throughout the economy, reducing insurance premiums in exchange for the VAT rise. Theoretically, this could lead to an increase in revenues of almost 450 billion.
However, as said the publication of one of the officials, the reform has so far decided not to run because it “entails too many problems.” In particular could hurt the poorest of the poor as falling incomes, prices would have to lay the VAT increase.
As explained by officials, because of the unknown composition of the government, which will be created after the presidential election in March 2018, now nobody dare to take responsibility for radical or unpopular reforms. However, they do not rule out that the debate about taxes may continue after the March vote.
“If you raise taxes, you to offload the mobile base (taxes on capital) to immobile (taxes on consumption)”, — told the head of the Economic expert group Evsey Gurvich. Rates of income tax — a factor of international competition for capital, and people won’t go for bread, to another wound, because there is a lower VAT, he explained.