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. Last Updated: 07/27/2016

Trade Unions Up in Arms Over Tax Plan

Trade unions Wednesday staged nationwide protests against the introduction of the single 7.6 percent social tax proposed as part of the government's package of tax changes, which unionists fear would cancel most of the benefits people are entitled to under existing legislation.

Some 250 trade union activists gathered outside the State Duma building on Okhotny Ryad in central Moscow. Similar protests were staged in St. Petersburg outside the office of the presidential representative in the northwestern federal district and 15 other regions, said a spokesman for the Independent Trade Unions Federation.

The protests had been planned to encourage the lower house of the Duma to vote against the proposed tax, which would be used to fund health and welfare services. However, the Duma on Tuesday postponed debating the amendments until Friday.

The 7.6 percent social tax is designed to simplify the tax system and to get budget policy back to reality by eliminating social subsidies that are listed in the budget but for which the government rarely pays.

Under the existing law, employers deduct employees' wages by 5.4 percent to pay into the social securities fund and by 3.6 percent to pay the compulsory medical insurance fund. The social security fund is designed to cover the costs of sick leave and maternity leave, child benefits and part of the cost of treatment in sanatoriums and summer camps for children.

The new plan proposes to unite both contributions and to decrease social securities payments to 4 percent in the first year after the amendment is passed to 3 percent in the second year and to 2 percent in the third year. Contributions to the medical insurance fund are to stay at 3.6 percent.

Alexei Surikov, deputy chairman of the Independent Trade Unions Federation, said the proposed 7.6 percent social tax rate would not cover the costs of sick leave and maternity leaves costs, let alone benefits such as subsidized children's camps and treatment in sanatoriums.

"We are not against amendment of the Tax Code in general - we are against elimination of the social securities system, its transfer to the tax collection system and the reduction of subsidies," Surikov said Wednesday in a telephone interview.

He said the changes would hit those who really needed these benefits severely.

"These services [camps and free treatment] will no longer be available to some 40 percent of the population earning less than the average monthly wage of $67, those who cannot afford to pay for the services," Surikov said.

"We are being told that such contributions do not exist in Western countries, but none of those countries have such low wages as we have," he added.