Growth rates for insurance premiums leads to an increase of the informal sector in the economy, said Finance Minister Anton Siluanov. According to the Minister, it is necessary to move in the “opposite direction” and to reduce the rate of insurance contributions while increasing VAT rates, reports .
“Believe it is possible to reduce the total rate of insurance contributions and shift the tax burden to indirect taxes. According to our calculations, so that it was neutral for the budget, rates should be calculated say, somewhere around 22%. The rate of insurance contributions 22% kompensiruet 22% rate of value added tax,” — said the Minister.
“We see that the more we increase the rate of insurance contributions, the more we see the growth of the informal sector. Therefore, we believe that there is need to go in the opposite direction, on the contrary, to reduce this heavy burden for the companies on the payroll. She’s one of the highest among countries with developing economies, but developed economies,” — said Siluanov.
Siluanov also has offered “to think about improving the payment of insurance premiums”. “We believe that in the face of declining rates we could make a flat rate of 22%. Thus what is plus, is possible and necessary to talk about the introduction of the single payment to be split in accordance with the codes in the state budget funds. It will be one payment system, simplifying administration for businesses, simplification of reporting,” explained the Finance Minister.
He also added that the Finance Ministry proposes to retain exemptions from VAT for certain sectors. “VAT, we propose to save the preferences on VAT for certain sectors — agriculture, medicine, education, the financial sector. The only people for whom it can provide additional load — those sectors that operate quasi-legally, which show less of the revenue that do not pay taxes”, — concluded Siluanov.
According to calculations of his Ministry, the increase in VAT will cause a one-time “contribution to inflation” at 2 percent.
Earlier, on 15 February, the newspaper “Vedomosti” wrote that in the economic block of the government, there is a consensus on the need to reduce taxes on labour, and raise VAT. The ideologist of the new approach is, according to sources, the Minister of economic development Maxim Oreshkin. Deals. generally supported the Minister of Finance, wrote the paper, but he was “cautious” because of a revenue shortfall of extrabudgetary funds will have to compensate from the Federal budget.
On examination there were several variants of the tax maneuver: to reduce insurance premiums up to 21% and increase VAT to 21%, as well as options “20/22”, “22/22”, “21/22”, however, at the time, told the sources, the final decision still had not been accepted.
First Deputy Prime Minister Igor Shuvalov confirmed then that there were different options. “It could be different, depends on how the outcome of the discussion”, — said Shuvalov at a reporter’s question . According to him, the authorities are discussing tax design together with insurance contributions which should be included as a new proposal for the medium term. “But it’s not before next year”, — said the first Deputy Prime Minister.