| Oil workers and homeowners will pay the most for tax reform For the first time in modern Russian history, some reform now has not only a start date, but also an end date. Tax reform will end in 2005.
In order to complete the reform on a positive note - that is, the long-awaited removal of wages from the shadows - the government is ready to get down to business ahead of schedule. In order not to be embarrassed next year with a radical reduction of the single social tax (UST), without transferring the payment of part of this tax to the shoulders of the population, the country plans to introduce a new mechanism for withdrawing income from the oil industry starting in the summer of 2004. This became known after yesterday's discussion of the tax package at a government meeting.
It is proposed to attack the oil industry from two sides at once: increase the mineral extraction tax and increase export duties. The scale of duties will be coordinated by the Ministry of Finance with the Ministry of Industry over the next two months, but it is already known that if oil prices are above $25 per barrel, the exporter will have to pay the state a 65 percent duty. The base rate of mineral extraction tax (MET) will be rounded from 347 rubles. per ton of oil up to 400 rubles. According to the government's plan, of the overall increase in the fiscal burden on the oil industry, one third will be an increase in the mineral extraction tax and two thirds will be an increase in duties.
According to the Ministry of Finance's calculations, “without noticeable damage to the oil industry,” one and a half billion dollars can be withdrawn from the industry at oil prices of $24 per barrel and two and a half billion at a price of $27 per barrel. It is this money that should cover the risks of the treasury when the social tax is reduced.
Having secured itself with oil “windfall profits”, the government did not skimp on reducing the single social tax. The effective UST rate will immediately decrease by 6 points - from 30 to 24%, which, according to the Ministry of Finance, will make it possible to pay “white” wages even in traditionally “black” industries - the service sector and manufacturing. True, many experts express concern that most enterprises will not be able to take advantage of the regressive scale (the higher the income per employee, the lower the tax rate). The fact is that when calculating the average earnings at an enterprise (the size of which allows access to regression), the salaries of the highest paid employees are not taken into account. Therefore, the new procedure for collecting UST in practice will provide access to regression only to those enterprises where the salary of ordinary employees exceeds $800 per month.
So far the government has not decided to split the Unified Social Tax itself into two parts - a tax on employers and a tax on citizens. Citizens no longer have to fear a “voluntary” 4% addition to income tax. The employer will continue to be solely responsible for contributions to both the insurance and funded parts of the pension.
True, having avoided an indirect increase in income tax, citizens will soon begin to pay more for their property. Property tax for individuals will be calculated based on the market value of property - apartments, dachas, garages and other real estate. That is, it will soon be possible to forget about the modest figures for assessing the cost of housing in BTI certificates.
There is no method for calculating the new property tax yet. However, Finance Minister Alexei Kudrin said yesterday that this will most likely not be an individual assessment of each individual apartment, but a mass average assessment, multiplied by a regional coefficient. Formally, the property tax rate is reduced. But since it will be calculated based on market value, fiscal authorities will be able to charge 10-15 times more than today. An increase in property taxes can partly be offset by the benefits of receiving “white” salaries - citizens’ free access to loans and the opportunity to replenish personal pension accounts for old age.
It is possible that yesterday’s government proposals on unified social tax and oil taxes will be adjusted at the stage of discussion in the State Duma. At the so-called zero reading of the package, the Duma intends to insist on lifting restrictions on access to the regressive UST scale and an even more significant increase in oil export duties. The mineral extraction tax, according to deputies, on the contrary, should not be increased in such a significant amount as the government proposes. According to legislators, any manipulations with the mineral extraction tax should be carried out with an eye to the fact that an increase in this tax immediately causes an increase in retail prices in the country.
At the very last moment, the tax package unexpectedly included amendments increasing the taxation of dividends and clarifications to the income tax. The government wants to increase the tax on dividends (the dividend scheme is actively used in many “black” salary schemes) from six to nine percent, which, according to the Cabinet of Ministers, makes the existence of these same “black” salary schemes inappropriate. Amendments to the income tax, although they seem technical at first glance, actually expand the tax base. This will be done by reducing the list of expenses that can legally minimize the amount of this tax.
Although the package did not contain amendments on the introduction of VAT accounts, which large businesses unanimously rebel against, the Ministry of Finance assures that this idea is by no means forgotten and can be implemented in a softer version. Yesterday it also became clear that in the dispute between the Ministry of Finance and the Ministry of Economic Development about the harm and benefits of VAT accounts, supporters of their introduction most likely won. The head of the Ministry of Economic Development and Trade, German Gref (who usually vehemently argues for the anti-liberal influence of the special VAT regime) was silent at the government meeting. But Ministry of Finance officials who actively defended special accounts were appointed personally responsible for the implementation of tax innovations.
According to Prime Minister Mikhail Fradkov, who yesterday looked extremely pleased with the “coordinated work of departments to develop concepts for the tax package,” Messrs. Alexei Kudrin and Sergei Shatalov (Minister and Deputy Minister of Finance, respectively) will answer with their heads for the laws they wrote. These gentlemen, as you know, have long promised that they will begin to think about reducing the VAT rate only after all issues with false reimbursement of this tax have been resolved. They are also known for their radicalism towards tax “minimizers”. On instructions from the Ministry of Finance, the tax service has already begun to create a list of tax evasion schemes. So in the near future, tax reform will be used not only as a carrot, but also as a stick. Irina SKLYAROVA, Vera KUZNETSOVA |
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