Tax Relief Proposals To Be Submitted To Russian Cabinet On February 6

by Tatiana Smolenskaya, Tax-News.com, Moscow

31 January 2003

Speaking at a session of the Russian Union of Industrialists and Entrepreneurs (RSPP) on Wednesday, Finance Minister, Alexei Kudrin revealed that the package of tax reform proposals which includes the abolition of the sales tax and substantial reductions in VAT and social taxes will be submitted to the government for discussion on February 6.

Mr Kudrin explained to those attending the RSPP meeting that the government's ongoing tax reform programme should cut the country's tax burden by around 1.5% of GDP next year, and revealed that at 30.7% of GDP, the tax burden in 2003 is likely to be significantly lower than in 1999 and 2000, when it represented between 32-34% of gross domestic product.

According to a Moscow Times report, also speaking at Wednesday's session was Kakha Bendukidze, the head of the RSPP's tax working group. He expressed dissatisfaction at the pace of reform, arguing that:

'The [government's] ideology seems to be that 2003 has passed, let's not do anything in 2004...This approach is unacceptable. Either we believe that lowering taxes is good, so let's discuss how to do it now, or believe it's harmful and let's not.'

However, Mr Kudrin responded by explaining that the government can't move too fast with its tax cutting plans: 'As much as we'd like to speed up the process of cutting taxes, we can't cancel or suspend a whole series of budget expenses,' he announced on Wednesday.

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