The Ministry of Finance explained the choice of VAT as a tax to increase :: Economy :: RBC

The government decided to increase VAT from 18% to 20%, as such a measure to a lesser extent, will affect the Russians with low incomes and less extensive impact on the business climate, explained the Ministry of Finance

Photo: Anton vergun / TASS

The government has proposed to raise the VAT, as it less affects the welfare of the poor. This was at a meeting of the public Council of the Ministry of Finance said the Deputy head of the Ministry Vladimir Kolychev, the correspondent of RBC.

“Discussion on setting up the tax system for quite a long time was conducted, there were a lot of different offers: and sales tax, and the abolition of some benefits, including preferential VAT rates for socially significant goods and other proposed tax maneuver. But in the end I opted for a VAT because it is the least distorting for the business community in the first place. And second, to a lesser extent, will affect the well-being of groups of population with low incomes”, — said Kolychev.

So, Deputy Minister of Finance answered the question of the President of the Center for strategic research of Paul Kadochnikova, who asked why the government decided to raise VAT and not to reduce growing tax costs (ie the costs associated with the provision of tax benefits).

The VAT increase from the current 18 to 20%, which suggests the government will allow to replenish the budget of an additional 600 billion rubles annually, said the first Vice Prime Minister, Minister of Finance Anton Siluanov. The money should go to education, health, social security and culture — these are priorities spelled out in the new the may decree of Vladimir Putin, the financing of which will cost an extra 8 trillion in six years. For business, the government offers a package of compensation measures including, in particular, facilitating and accelerating the procedures for VAT reimbursement and the cancellation of tax on personal property.

However, the VAT increase will reduce GDP, consumption, investment and foreign trade of Russia in comparison with the hypothetical trajectory, built without the tax changes, assessed head of the laboratory of macroeconomic modeling Department of the Gaidar Institute Andrey Polbin. According to his calculations, the growth rate of GDP and household consumption in 2019 will be reduced to 0,2–0,35%, investments — 0.4–0.7%, import — on 0,35–0,45%.

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