Putin orders government to cut payroll tax from January

Prime Minister Vladimir Putin ordered Finance Minister Alexei Kudrin to work on cutting the payroll tax, saying the government must the ease the fiscal burden on companies.

“It is obvious that the fiscal burden is to be cut. Companies, business are to have more resources for development. I am ordering Alexei Leonidovich Kudrin to present concrete mechanisms and parameters fpr cutting the payroll tax from January 1, 2012,” Putin told a government meeting on Monday.

Putin’s comments echoed those by President Dmitry Medvedev who last week suggested cutting the payroll tax to improve the investment climate in the country. In 2011, the government boosted the volume of payments which companies contribute to social funds depending on the amount of their employees’ salaries to 34% from 26% in 2010.

Presidential economic aide Arkady Dvorkovich estimated possible budget losses from cutting the tax back to 26% at 400-500 billion rubles. He said the government had expected to get 700-800 billion rubles as a result of raising the tax.

Local media have said recently that a group of the country’s leading economists has recently presented a report to Putin which said that stimulation of consumption to spur economic growth no longer worked in Russia and the government should concentrate on stimulating production.

Kudrin has long been a staunch opponent of raising taxes and has said recently that Russia can no longer raise taxes if it wants the economy to grow.

MOSCOW, April 4 (RIA Novosti) 

Leave a comment