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Photo Credit: http://ria.ru
The government has laid out plans to survive a period of slackening growth in the economy and restrictions imposed by the West.
The blueprint was voiced by the Russian Prime Minister at the Sochi 2014 International Investment Forum that took place last week.
The government had three options to improve budget balance – cutting welfare programs, boosting public investment, and raising taxes. According to the Prime Minister, the government has decided not to take the shortcut and slash social programs spending, no matter how tempting the move seemed.
Instead, as he pointed out, “all of the Government’s social commitments will be fulfilled, through the combined effort of the federal and regional governments.” Nevertheless, the Prime Minister called on federal and regional governments and state-controlled companies to pursue cost-cutting measures.
Russia will leverage the massive cash stash it has accumulated in its sovereign funds more actively. Currently, the total assets of the National Wealth Fund (NWF) and the Reserve Fund amount to 6.5 trillion roubles. Part of it will be injected into the real economy through infrastructure projects like the Trans-Siberian Railway, the BAM, the Central Ring Road motorway in the Moscow Region, bridging the digital gap and developing intelligent networks.
Taxes is a sensitive issue for any country. According to the Prime Minister, tax burden will largely remain the same. “We did not increase the VAT, realising that this will further complicate the already difficult situation of our entrepreneurs; on the contrary, we must improve the business environment. We decided not to raise the personal income tax, so as not to reduce the take-home remuneration of our people, and left the flat tax rate unchanged, although it is being occasionally attacked. Following a long debate, we have also dropped the idea of introducing a sales tax,” Medvedev told the summit of business leaders.
However, some regions will have the right to levy special charges from retailers, caterers, taxicabs, as well as tourist and resort fees, he added.
The government will also focus on the development of the agricultural sector. The updated national program will facilitate import substitution – dairy breeding, beef cattle breeding, gardening, and vegetable growing in the open and greenhouses, as well as access to capital.
Sources: http://government.ru http://kubnews.ru
Author: Mikhail Vesely
