Presidential Advisor on Finance Ministry's debt and sales tax

Russian Presidential Economic Advisor Andrey Illarionov considers it expedient to write off the debt of the Russian Finance Ministry to the Russian Central Bank. As Illarionov told journalists yesterday, the debt amounts to $10bn. The Central Bank allocated this money to the Ministry in a grave economic situation, the Advisor pointed out. However, in his opinion there are neither economic nor legal reasons for preserving the debt, "as these are two pockets of one mechanism".

As for a sales tax, which is to be abolished on January 1, 2004, Illarionov said that this tax is "not more harmful than the VAT". In the Advisor's opinion, the VAT causes much more problems, including difficulties with reimbursing this tax. However, these two taxes are levied from the same base, this is why one of them should be abolished, Illarionov believes. At the same time one should take into account not only the easiness of administering a tax, but also who receives resources from it.

Two years ago the Russian government decided to abolish the sales tax beginning January 1, 2004. However, on May 20, 2003, the Fatherland-All-Russia faction of the State Duma suggested retaining this tax.