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Russia mulls raising value added tax, cutting social security tax

MOSCOW (Reuters) - Russia is considering raising value added tax but lowering mandatory social security payments, Finance Minister Anton Siluanov said on Monday.

The current government, whose term expires next year, has pledged not to change tax rates. But the next government, which will be formed after the first round of a presidential election in March 2018, is expected to have a freer hand.

Speaking at an economic conference in Moscow, Siluanov said his ministry was proposing cutting mandatory social security payments, which employers pay on every employee, to 22 percent from their current level of 30 percent.

Value added tax, which is regarded as a tax on consumers, should be raised at the same time to 22 percent from 18 percent, said Siluanov.

Such changes could spark a one-off 2 percent increase in consumer inflation, he said.

"According to our calculations, that would be neutral for the budget," Siluanov said.

He did not say when the proposed changes might be introduced, describing the ideas as suggestions. His ministry wanted to avoid an increase in spending so as not to raise the overall tax burden, he said.

Vladimir Putin, who is widely expected to run for what would be a fourth presidential term in 2018, has called for changes to the tax system to be made in 2019. Other reforms under consideration include raising income tax and the retirement age.

(Reporting by Darya Korsunskaya and Denis Pinchuk; Writing by Andrey Ostroukh; Editing by Andrew Osborn)