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. Last Updated: 07/27/2016

Putin Calls for Stable Taxes To Encourage Investment

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President Vladimir Putin said Tuesday that consistent tax policies should help the economy attract much-needed new investment and he backed further streamlining of the existing tax regime.

Russia, seeking to cut down on widespread tax evasion, introduced a new flat rate of income tax this year of 13 percent to replace the previous sliding scale of 12 percent to 30 percent.

"It is stability and predictability [that are needed], without which further investments would be impossible, it is consistency," Putin told a Kremlin meeting of tax officials.

"We guarantee that the 13 percent rate that we introduced is serious and here for years to come," he said, scotching rumors that the variable income tax rate might be restored after the new lower rate encourages people to disclose earnings.

Putin said he supported further reductions in the tax burden and simplifying the tax administration system, but he expected taxpayers to pay in full as Russia’s current taxes were among the lowest in the world.

Putin warned tax authorities against complacency about recent high tax-collection rates, saying this could be explained by last year’s economic upturn.

Tax collection revenues almost doubled to 628.5 billion rubles ($22 billion) in 2000, with the total rising 75 percent to 700 billion rubles if payments to special extra budgetary funds are included, the Tax Ministry said.

Putin said controls should be tightened, but authorities should act on a strictly legal basis. Companies are often raided by masked and armored tax police looking for evidence of possible tax evasion.

Prime Minister Mikhail Kasyanov told the meeting that tax officials should promote awareness of the need to pay taxes.

"Demonstration of physical force is not efficient and often counterproductive," he said. "Taxes should be paid not out of fear, but out of the belief that it is the basis for the existence of the state."