OREANDA-NEWS. November 21, 2011. Vladimir Putin’s speech: Ladies and gentlemen, I am pleased to welcome the participants and guests of this conference who represent tax agencies from various countries and international organisations. We have had a chance to speak with many of them, and I would once again like to thank them for finding the time to come to Russia and for making it happen. And, of course, I would like to congratulate all Russian tax officials on their professional holiday, Tax Worker Day. Congratulations, and all the best!

The modern Russian tax system was developed from scratch. We are all aware of what the tax system was like during the Soviet era – a purely formal system that incorporated no elements of market operation at all. In the mid-1990s, there were dozens of federal, regional and local taxes in Russia. Finding one’s way even to a basic understanding was impossible. Since then, we have done a great deal to formulate and streamline legislation, and we have since adopted the Tax Code. The number of taxes has been cut to 13 and we also have four special tax regimes. Another positive example of this development is that ten years ago, we audited one in every ten taxpayers. Today, onsite tax inspections are only held for eight out of every 1,000 companies, which is one of the lowest figures in the world. On the whole, I believe we have created a sufficiently liberal and competitive tax system.

At the same time, it is clear that this system should be further improved. I’d like to draw attention to the following principles and priorities. First, tax inspections need to be as convenient and comfortable as possible for people and economic players. Second, we should strengthen the stimulating role of the tax system, primarily for the purpose of structural modernisation of the economy and the social sphere, and for supporting innovation. The fiscal burden should be distributed more fairly across various sectors of the economy. And third, we must ensure stable tax deductions at all levels of the budget system, from the federal down to the municipal level. Of course, this is not your task alone, and perhaps it is not even yours in the first place.

At this point the government itself and the State Duma should think this over. They should discuss this issue again and make sure that tax revenues are fairly distributed among all levels of the system. But your role in this should be substantial as well.

Finally, the fourth aim is to guarantee the predictability and stability of the tax system as a major condition for implementing long-term plans of national strategic development.

The government’s policy is to consistently increase our treasury’s revenues, not only by increasing the overall tax burden on people and economic players, but also by improving the quality of tax administration, encouraging economic development and ensuring the necessary rate of economic growth, thereby expanding the tax base.

This logic is producing results. Better tax collection is a major result of systemic work in the tax sphere. We think that next year Russia’s consolidated budget will receive about… We have just spoken with the head of the tax service and he said that 7.7 trillion has already been collected and we expect this figure to increase to 9.8 trillion before the end of this year. Let me mention for comparison’s sake that this is seven times more than in 2000. Seven times! In 2000, the consolidated budget received 1.4 trillion roubles and in 2010 7.7 trillion. And this year we have already received 7.7 trillion!

The income tax is a striking example of effective tax solutions. Russia has one of the lowest income taxes in Europe and the rest of the world – 13%. We had many debates on this score and we continue them now. I think we did the right thing. First, we encouraged employers to pay official salaries, thereby better protecting the social rights of their employees. Let me add that in 2010 income tax revenues exceeded our entire budget in 2000.

I consider the practice of tax rebates to be a big achievement as well and we must continue it. I’m referring to the right of all citizens to recover part of their income taxes if they had to pay for housing, medical treatment or education.