FAS may be divested of free competition control monopoly

The argument over the Federal Antimonopoly Service (FAS) reforms related to reauthorization between its other departments thrives within the expert community.

Based on the results of the Expert Council meeting affiliated to the Government of the Russian Federation as of June 23, Dmitry Medvedev ordered to carry out the inspection of the service powers. According to experts, the large set of FAS powers influence on the operating quality that doesn’t give an opportunity to concentrate on the key problems of competition development.

In particular, the following is defined:
- to delegate the control of the state and state companies purchases to Federal Service for Fiscal and Budgetary Supervision;
- to delegate the FAS rule-making powers to the Ministry of Economy and Development;
- to integrate the FAS with the Federal Tariff Service (FTS).

The Ministry of Economy and Development met the proposals of the experts with hostile attitude. The Federal Service for Fiscal and Budgetary Supervision monitors the reliability of budget expenses and its proper use and FAS – the competition in trading. The delegation of powers might lead to dilution of control function.

In case of the delegation of rule-making powers, there will be either lack of supervision, or the dual liability. At the same time, the role of the other department will be just technical: legislative amendments will be proposed by the antimonopoly department.

The FAS and FST integration issue is still at the stage of discussion.
In the meantime, members of business environment by contrast appeal no to curb the powers, but to enlarge them, as today it is the only department that really protects the business from monopolists and government officials.

In 2015 business and population are expected the increase of tax burden

In spite of curtailment of discussion about the introduction of sales tax and increase in VAT, which was the subject of much controversy about the expediency of such steps, anyhow we have to experience the increase of cumulative tax burden in 2015: a number of amendments have been already introduced to the Tax Code of the RF by the Government of Russia.

  • Dividends tax.

Rate of tax on individual income, received in the form of dividends, increases from 9 up to 13%. Also it is offered to increase the rates of company tax on incomes from share interest in companies’ activity. The Ministry of Finance expects that only change of the tax for enterprises will earn extra revenue in the amount of 10,9 bln RUB in 2015.

  • Insurance contributions.

Today the insurance contributions to the Compulsory Medical Insurance Fund make 5,1%. They are collected from annual salary 624 000 RUB (52 000 per months). No contributions are imposed on that all what is higher. Now this threshold is removed, and contributions will be taken from all salaries. By that the main tariff will remain 5,1%, and reduced rates will be also the same. In 2015 it is planned to have 140 bln RUB of extra revenues from this innovation in the federal budget.

  • Excise duty on gas.

It was offered to levy excise duties on gas export to Turkey via pipeline «Blue stream». Extra revenues from excise duty – 41,7 bln RUB in 2015.

  • Excise duty on cigarettes.

Today the manufacturers of cigarette in Russia pay excise duty at the rate of 800 RUB per 1000 cigarettes (specific part) plus 8,5% from their retail price (ad valorem part), but not less than 1040 RUB. According to the Tax Code, in 2015 the rate should increase up to 960 RUB plus 9% from retail price (not less than 1250 RUB). In 2016 – up to 1200 ths RUB plus 9,5% from retail price (not less than 1600 RUB). Suggested variant of amendments supposes the conservation of former growth plans of specific part of excise duty in 2015 (up to 960 RUB) and increases ad valorem part up to 9,5%. In 2016 only ad valorem part of excise is planned to be changed – up to 10%. In 2017 it is offered to fix the specific part of excise duty at the rate of 1350 RUB and ad valorem – 10,5%. In 2015 the budget will receive – 24 bln RUB.

  • Water tax.

Indexation of water tax rates and payment for use of bodies of water, being in the federal ownership, has not been carried out since 2005. By that water tariffs supplied to consumers had been increased more than in 6 times. The budget statement supposes that an indexation by 1,28 times will be carried out in 2015, in 2016 – by 1,64 and in 2017 – by 2,08 times. Promoted indexation will be carried out till 2026, then – only on inflation. Extra revenues in 2015 – 2,8 bln RUB.

  • Payment for forest.

Indexation of rates on payment for use of forests has not been carried out since 2009. The Ministry of Finance offers to carry it out by 1,05 times in 2015, by 1,1 times – in 2016 and by 1,15 times – in 2017. The suggestion had been submitted to the government as early as in July 2014, there had been no objections. Extra revenues in 2015 - 800 mln RUB.