Deputy Economic Development Minister Recommends Reduction In Social Tax Rate

It would be expedient to reduce the single social tax rate to 25%, Deputy Economic Development and Trade Minister Arkadi Dvorkovich said today at a conference of the Russian Union of Industrialists and Entrepreneurs, devoted to problems of the tax reform. In his opinion, a reduction in the social tax rate to this level would not result in any substantial losses for the budget, and it could be set "quite confidently." In the deputy minister's view, incomes are underdeclared by at least one third now, which forms a reserve for this type of tax. The single social tax, comprising payments to the three off-budge funds, was introduced on January 1, 2001. Its maximum rate is 35%. Dvorkovich also believes that "more serious steps" towards reduction of the VAT and import duties are necessary. Thus, the tax burden on imports (the VAT, import duties, excises) makes up 40-50% of the total cost of imports now. The results of it are underdeclaration of imports, use of "gray and black (illegal) schemes," unequal conditions for competition for legal and illegal importers. "It is necessary to decide how we will eliminate this lawlessness," the deputy minister underlined.

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