Well-Known Industrialist Considers Tax Reform Too Slow

Tax reforms are being implemented very slowly in Russia. Kakha Bendukidze, head of the task group for the tax reform of the Russian Union of Industrialists and Entrepreneurs and CEO of the Unified Machine-Shops, gave this opinion at a conference on problems of tax reforms. In his view, the only achievement of the reforms is the introduction of the flat income tax scale with the tax rate of 13%. "This is what has been done and has proven efficient," he believes. At the same time, the introduction of the Single Social Tax is not fully used by companies, because for most of them access to the regressive scale of this tax is restricted. According to Bendukidze, the regressive scale of the social tax is practically prohibitive for a majority of companies. Bendukidze reckons that the reduction in the rate of the profit tax from 35% to 24% beginning January 1, 2002 will not improve the situation for most companies either. Due to the cancellation of the exemptions from this tax, including the exemption for investors, the sum of profit tax payments can increase instead of decreasing, Bendukidze thinks. According to him, the task group for the tax reform of the Russian Union of Industrialists and Entrepreneurs pays substantial attention to working out proposals on simplifying the tax collection system and works on improving the chapter of the Tax Code of Russia devoted to the profit tax.