Forgiveness from Putin whom the President has offered to write off tax debts

Forgiveness from Putin whom the President has offered to write off tax debts

President Vladimir Putin announced at its big press conference on tax reform. But he came up with several initiatives, including the forgiveness of tax debts of citizens and entrepreneurs in the amount of about 60 billion rubles.


President Vladimir Putin on the traditional big press conference on Thursday, 14 December, confirmed that in the coming years, large-scale tax reforms, such as the recently discussed tax manoeuvre, should not wait. About “maneuvers in the tax system” after 2018, when the moratorium expires, the increase in the tax burden, by Putin and announced in 2014, while “early to speak”, the debate “should be undertaken at expert level and after the decision brought up for discussion together with the business community,” he said. So he answered the question about whether to increase taxes.

However, Putin has made several initiatives focused rather on point relief and tax debt burden of the citizens. This forgiveness of debts of physical persons on property tax and debts of individual entrepreneurs for taxes and insurance premiums, and debts for personal income tax charged on “tangible benefits”, which occurs as a result of debt relief citizens Bank loans or utilities. From Putin’s words it follows that such “Amnesty” may affect debt totaling up to 60 billion rubles.

Not the first “gift”

In addition, Putin proposed to exempt pensioners, the disabled and veterans from taxation on their six acres, in the words of the President. Finally, he said that authorities are discussing the redistribution of the taxes collected from the Federal budget in favor of regions and promised to limit the growth of non-tax burden on business (fees and charges formally unrelated to taxes). Traditionally, such statements by Putin later couched in the form of instructions to the government.

The regions have “sufficient authority,” indicates the senior Director regional Finance Fitch Vladimir Redkin: “Any transfer of additional powers leads to the risk of insufficient funding that we’ve seen, for example, in the so-called may decrees. Consolidated sub-Federal budget is almost balanced, with sector as a whole is unlikely to need additional revenue, he said. But there is a significant proportion of regions with large deficits and large debts, and their problems are discussed widely enough, says Redkin. Stronger need to align fiscal capacity between regions and the Federation and between the entities in many countries, this is solved by centralized redistribution of tax revenues from rich regions to poor. “The sector of regional budgets as a whole is balanced: the “temperature” of the regional budgets — 36,6. But there are regions in dire Straits, so to speak — “in intensive care”. And we need to think not about the fact that in General the temperature by one tenth of a degree twist, and on how to translate them to the General ward,” — concludes the Redkin.

“The proposed initiative rather isolated measures of relief for taxpayers. This Amnesty can only be called in the broad popular sense. It usually implies the possibility to declare income taxes were not previously paid. But the current proposal is rather modest new year’s gift,” — says the partner of tax practice of law Bureau CHEAP Mikhail Uspensky.

This is not the first pre-election “gift” of Vladimir Putin: in November 2011, he instructed the tax authorities to cancel the debt of Russians on taxes, accumulated as of 1 January 2009, in the amount of 36 billion rubles.

No sudden maneuvers

A year ago, Putin gave a start to the discussion settings of the tax system, which has led to the fact that the Ministry of Finance proposed tax maneuver — reducing the overall contribution rate to 22% and increase VAT rates to 22%. At the beginning of the year the Ministry of Finance and Ministry of economic development talked about the idea publicly, but then discussion died down — after Putin said that talking about the maneuver prematurely. The talk about tax reform went the whole year, but now they are not, indicates the Director of the Economic policy program of the Carnegie Moscow center Andrei Movchan. The Ministry of Finance in November included a tax maneuver in its report to the government on tax setup, but the final government report to the President in December, this proposal was not, says RBC Federal official.

After the election, “everything is possible” because “the country is in manual control,” says Movchan. The government may make decisions contrary to those that were discussed before, and the fiscal burden will probably grow, as what Putin says, in fact never performed, said the economist.

To revive discussion on the broader tax changes can changes in the government, said in published on Thursday of the annual review of Russia from Bank of America Merrill Lynch. However, Putin said at a press conference that he is not ready to talk about new Cabinet members.