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. Last Updated: 07/27/2016

Lawmakers Back $8.8Bln Tax Cut

The State Duma, whose members face re-election this year, gave the initial go-ahead on Friday for a law to slash payroll tax by 270 billion rubles ($8.8 billion), more than the Cabinet wanted.

The government, keen to lower taxes in an effort to boost economic growth, had decided on a 240 billion ruble cut in the 2005 budget.

In the first of the three readings, deputies voted for a bill to cut the 35.6 percent unified social tax on wages under 50,000 rubles to 30 percent from 2005. The tax, paid by employers, would be cut to 15 percent for those who earn from 50,000 rubles to 600,000 rubles per year and to 5 percent on wages above 600,000 rubles.

Russia, which wants to narrow its economic gap with Western economies, is planning to eliminate the sales tax and reduce the value added tax to 18 percent in 2004 from 20 percent.

Under President Vladimir Putin, the government has already carried out sweeping cuts on taxes stifling the economy. The reforms included the introduction of a flat 13 percent income tax.