Expert: Tax Cuts Help Business, Government, and More Are Likely
Jan 05, 2004
MOSCOW. Russia's will continue to lower taxes in 2004, according to Irina Martakova, a partner in PricewaterhouseCoopers here. As reported by a Rosbalt correspondent, she said she expects a reduction this year in the value-added tax from 20% to 18%. She noted that the sales tax ended at the end of 2003, as did some regional and local taxes (militia tax, housing-communal services tax).
She spoke of two different tendencies in government tax policy over the course of 1999-2004. On the one hand, there was a reduction in the size of various taxes and outright repeal of others. On the other hand, there was a rise in taxes on tobacco and alcohol. 'If one compares the tax climate of the years of Boris Yeltsin's presidency with that of Vladimir Putin, it's quite clear that the overall tax burden has been reduced,' Martakova said. 'For example, a company with revenues of 120 rubles and expenses of 100 rubles would have paid 12 rubles in taxes in Yeltsin's time. Given the same figures, the company would pay only 5 rubles in 2004.'
The PricewaterhouseCoopers partner said the lowering of the tax burden had clearly had an effect in the rise of actual taxes collected as businesses moved from the 'gray' sector of the economy to the 'white.'
In tandem with the liberalization of Russia's tax system has gone a rise in its investment rating by international rating agencies. Thus, the international rating agency Moody's has been steadily raising Russia's national rating and, in October 2003, for the first time raised it by two steps simultaneously-from the speculative Ba2 to the investment level of Baa3.
She spoke of two different tendencies in government tax policy over the course of 1999-2004. On the one hand, there was a reduction in the size of various taxes and outright repeal of others. On the other hand, there was a rise in taxes on tobacco and alcohol. 'If one compares the tax climate of the years of Boris Yeltsin's presidency with that of Vladimir Putin, it's quite clear that the overall tax burden has been reduced,' Martakova said. 'For example, a company with revenues of 120 rubles and expenses of 100 rubles would have paid 12 rubles in taxes in Yeltsin's time. Given the same figures, the company would pay only 5 rubles in 2004.'
The PricewaterhouseCoopers partner said the lowering of the tax burden had clearly had an effect in the rise of actual taxes collected as businesses moved from the 'gray' sector of the economy to the 'white.'
In tandem with the liberalization of Russia's tax system has gone a rise in its investment rating by international rating agencies. Thus, the international rating agency Moody's has been steadily raising Russia's national rating and, in October 2003, for the first time raised it by two steps simultaneously-from the speculative Ba2 to the investment level of Baa3.