Principles of taxation of business won’t be changed, but new levies will be introduced

The Government of the RF is not about to make amendments in principles of taxation of business. This was announced by the Prime Minister of the RF Dmitry Medvedev in the course of its speech at the forum of the organization «Opora Rossii», dedicated to small business. The Prime Minister stated that in spite of external-economic difficulties and tight budget, the government doesn’t plan to introduce changes in principles of taxation of business.

As a reminder, earlier the government refused the increase of VAT, PIT and move towards progressive taxation scale. Also they refused the introduction of sales tax, against which were: the Ministry of Finance, Ministry for Economic Development (MED), as well as the Deputy prime-minister Igor Shuvalov. According to the opinion of most experts, the introduction of new taxes in the current economic situation, when it is necessary to stimulate the development of small and medium business, will have a negative impact on economic and investment climate of the country.

Along with this in the course of International investment forum «Sochi-2014» Dmitry Medvedev informed about government’s intention to support regional budgets, which incur a deficit of funds, on account of the introduction of additional tax levies. Note that at year-end 2013 the amount of total consolidated debt of constituent entities of the Federation owed to the budget increased by 26,9% and as of the 1st of January of the current year made 2 trn 26 bln RUB. The most part of borrowings goes toward discharge of the budget deficit, which increases annually. Along with this the debt of municipal entities also increases. So that as of today the debt of local self-government authorities reaches 288,9 bln RUB.

The Prime Minister offered to allow regions to introduce additional taxes on trading rights, on food service, as well as tourist and visitor’s tax by themselves. Note that earlier tourist regions of the country (Krasnodar territory, Moscow and Saint-Petersburg) advanced the initiative to introduce the tourist tax.

According to preliminary estimates of the Ministry of Finance, due to new levies regions will be able to replenish the budget by 50-70 bln RUB annually. By that an effect from the introduction of sales tax is estimated at 200 bln RUB.

New levies can be introduced already since next year, but their amount isn’t determined yet. The right to impose taxes will be transferred most likely to regions, and at the federal level it will be set just the upper limit.

The experts note that suggested levies won’t help solve a problem of budget deficit of outlying regions, but will come upon small traders and taxi drivers, i.e. upon representatives of small business and individual entrepreneurs. The introduction of levy for trading rights can be considered generally as an additional administrative barrier for entrance to the market. Finally, all tax «innovations» will be paid by consumer, because the increase of tax burden will automatically have an impact on price.

As a reminder, the current Tax Code allows to collect one-time charges for providing of government services. Besides that one-time charges are collected for hunt and fishing.