OREANDA-NEWS. March 11, 2011. Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, Mr Mishustin. To begin with, it's common knowledge that the breakdown of tax revenues reflects the state of the economy and major economic trends. How would you assess its current state? Are there any new trends in taxation? How did your service perform last year? How have income brackets changed?

Mikhail Mishustin: Mr Prime Minister, we have just summed up the results for 2010, and I can report now that the aggregate, consolidated budget of the Russian Federation received 7.7 trillion roubles in revenues, which is 22% more than in 2009. We fell short of the 2008 figures by only 3%. I'd like to remind you that in 2008 we reached a historic peak in tax revenues. That was largely due to a favourable situation on the oil market. In 2008, the average oil price was USD 94, whereas in 2007 it was USD 77, which could not but influence the amount of revenue collected through taxes. It should be added that during the crisis, the income tax was reduced by 4%.

In response to your question about the breakdown, first of all I'd like to say that in 2008, property taxes accounted for only 6% of the revenue of the consolidated budget, and, during the crisis, that figure grew steadily, reaching 9% in 2009. Naturally, the shares of other taxes were smaller. This trend continued through 2010. The share of property taxes in the consolidated budget currently stands at 8%.

There was a drop in tax revenues on fuel extraction. They accounted for 21% in 2008, 17% in 2009, and 18% last year. Personal income tax revenues increased in absolute terms but fell somewhat in adjusted terms. They amounted to 21% of all revenue in 2008 and 26% in 2009. Last year, they totalled 23% and are currently on the rise. In absolute terms, they stood at 1,665 billion in 2009 and 1,790 billion in 2010. It is very gratifying to see this growth.

Vladimir Putin: So that shows that people's incomes are growing, and so is their share in government revenues.

Mikhail Mishustin: Another positive trend is a stable growth in profit tax revenues. In 2010 they increased by 40% year-on-year, growing by 60% in the first two months of this year as compared with the same period in 2010. That's very good. In 2008, the share of profit tax revenues was 32%, falling by 12%, to 20%, during the crisis. Then it started to grow, reaching 23% recently.

Vladimir Putin: So that means that companies' profits are growing and so are deductions?

Mikhail Mishustin: Yes, and they grew significantly in the first two months of this year. We have already collected preliminary figures for January and February. According to the preliminary data, the federal budget received 632.6 billion roubles in revenues, which is 10% more than the same period in 2010. But I'd like to reiterate that in absolute terms, profit tax revenues amounted to 67.4 billion roubles, which is 60% more than in January and February of 2010. And given that they increased gradually all year, growing by 40% in total, we can conclude that we are coming out of the recession. Businesses are reviving. We are collecting more in personal income taxes and profit taxes and becoming less dependent on the oil and gas market. That's what we see from the figures.

There is a huge potential for profit taxes. I believe that it is possible to increase the revenue they provide. They are currently growing both in absolute and relative terms.

Vladimir Putin: Good.