Vladimir Putin: Government's tax innovations "very modest, but thought-out"

The steps proposed by the government to reduce the tax burden in the economy are "so far very modest, but thought-out," said Russian President Vladimir Putin at a press conference in the Kremlin on Friday.

Redistribution of the tax burden in order to create better conditions to develop processing and technological industries is one of the cabinet's main tasks, he said.

On June 1, 2004, the value-added tax will be cut by 2 per cent, while the sales tax will be abolished, the President recalled. The structure of the tax on mineral resources extraction, as well as of some other taxes will be improved, he pointed out. Moreover, individual taxation is also to be improved, Putin emphasized.

From 2005 the government intends to reduce the single social tax which should lead to further legalization of salaries, he said.

The funds that will remain in the economy due to the reduced tax burden should be invested in the development of the Russian economy, the President pointed out.

Mere tax reduction is not enough in this case, it is necessary to create conditions when the released means are claimed by the economy, he underlined.

"Taking into account the dynamics of slowed-down capital exports and growing investment in major assets, there are reasons to believe that the process will be developing this way," the Russian leader believes.