Government won’t raise payroll taxes again says Kudrin

The Russian government does not plan to increase payroll taxes for social non-budget funds after 2013, including pension funds, Finance Minister Alexei Kudrin said on Saturday.

President Dmitry Medvedev announced on Friday that the maximum rate for payroll taxes in Russia from 2012 would be reduced to 30 percent from the current 34 percent, and to just 20 percent for small businesses working in manufacturing and social sectors. The cut was essential at this “crossroads period,” he said, at the St Petersburg Economic Forum.

“We will prepare a more systematic proposal at this time (2012-13),” Kudrin said. “We are not suggesting subsequently increasing it to over 30 percent. We are going toward 30 percent, but maybe in a more defined formula for different rates,” he said.

The government will not increase other taxes to make up for the loss of revenue from the cut in payroll taxes, Kudrin said.

“Among the scenarios that were suggested, was raising taxes. An increase in profit tax was among the variants considered. We have rejected that variant,” Kudrin said.

The head of Russian small business lobby Opora, Sergei Borisov, said he hoped the 20 percent payroll tax rate would be extended to all small businesses.

“We expected a bit more, but it’s not night yet,” he said on the sidelines of the forum.

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