ALEXEI VEDEV: “TAX CHANGES IN THE WAKE OF ECONOMIC RECESSION CAN LEAD TO NEGATIVE CONSEQUENCES”
Alexei Vedev, Head of the Financial Studies Department, Gaidar Institute, gave comments to TASS proposal formulated by the Ministry of Economic Development (Mineconomrazvitie) to introduce a unified turnover tax to the tune of 6.2% of earnings instead of four main taxes.
Earlier, Mineconomrazvitie proposed to introduce a unified turnover tax to the tune of 6.2% of earnings instead of four main taxes (VAT, profits tax, insurance contributions, and PIT) for the implementation of the equal taxation principle.
“It is more expedient to discuss any tax maneuver now at the expert level. I think, to impose a turnover tax will be appropriate when we recover at least to the 2019 level,”- noted Alexei Vedev.
Expert provided no answer to the question whether budget revenues would have increased on the back of replacement by a unified tax or not.
“Without doubt turnover taxes suppress consumption and direct taxes suppress investments. When we analyze issues related to reduction, for example, of the profits tax, then we understand that it is done with the aim to raise the investment activity and when we raise sales tax (incidentally, it was already abolished), then in essence it is also an indirect tax; they suppress consumption because immediately pass through to prices,” – explained Gaidar Institute expert, Alexei Vedev.
“It is more expedient to discuss any tax maneuver now at the expert level. I think, to impose a turnover tax will be appropriate when we recover at least to the 2019 level,”- noted Alexei Vedev.
Expert provided no answer to the question whether budget revenues would have increased on the back of replacement by a unified tax or not.
“Without doubt turnover taxes suppress consumption and direct taxes suppress investments. When we analyze issues related to reduction, for example, of the profits tax, then we understand that it is done with the aim to raise the investment activity and when we raise sales tax (incidentally, it was already abolished), then in essence it is also an indirect tax; they suppress consumption because immediately pass through to prices,” – explained Gaidar Institute expert, Alexei Vedev.