A review of benefits is to help the tax system

14 february 2018 | Izvestia

Leading expert associations in Russia are drafting proposals for the tax reform that the government plans to carry out as soon as this year, the Izvestiya newspaper writes. First Deputy Head of the Analytical Center Vladislav Onishchenko answered questions put to him by the newspaper's correspondent about what kind of changes the country's tax system is in need of.

Vladislav Onishchenko
Vladislav Onishchenko
Deputy Head

According to Mr Onishchenko there is no need to change the tax burden on businesses and individuals, but if the goal is to implement a reform, the first item on the agenda should be a review of all the tax benefits that exist today, some of which should then be eliminated. For example, the income tax exemptions for non-manufacturing companies should be canceled. Mr Onishchenko pointed out, however, that it is a benefit awarded by regional governments at their own discretion.

The personal income tax could be increased but the VAT should be reduced accordingly. This move would make people more responsible as they would feel their tax burden more directly. "Because VAT is essentially hidden in the price of the goods and services that people buy, many do not realize how much tax they actually end up paying," the expert explained, talking about the rational for his proposal.

Another possible change that could make sense according to the expert would be a restructuring of the tax system by increasing the role of direct taxes and reducing the role of indirect taxes. This would make the whole tax system more transparent, but only on condition of strict tax discipline on the part of the tax agents. As for the taxpayers, an increase in the share of direct taxes makes them more responsible. The increase in direct taxation should be accompanied by a decrease in indirect taxation, thus redistributing the tax burden between businesses and consumers, which should become a factor in stimulating investment-based economic growth.

Source: Izvestiya