The state Duma adopted the law on the VAT increase
The state Duma adopted in the third final reading the law on increase from 2019 the rate of value added tax (VAT) from 18% to 20%.
A government initiative, as well as raising the retirement age, was supported only by fraction “United Russia”. KPRF, LDPR and “Fair Russia” has opposed.
The Ministry of Finance expects that this measure will provide the Federal budget for more 633,5 bn in 2019, 2020 and 2021 — 678 728 bln and bln, respectively. The extra money the government needed for the execution of the new of the may decree of President Vladimir Putin — increased funding of infrastructure, demographic policies, healthcare and education.
The VAT rise will drive inflation, but will keep it in 2019 in the range of 4-4,5%, was acknowledged by the Finance Ministry.News
That will change when the VAT increase from 18% to 20%
The Ministry of economic development, in turn, expects inflation this year to 3.1% by year-end, and the transition of the population to the consumption patterns for the future of durable goods. Future growth rates have worsened inflation expectations.
Polled by economists warned that higher taxes will hit the most high-tech, or already victims of the crisis industries, especially in engineering and construction. According to the Chairman of the Duma Committee on budget and taxes Andrei Makarov, representatives of business have stated to deputies that estimate the increase in VAT as a contribution to the development of the country.