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2 Oct, 2008 00:37

2020 development plan will see changes to tax and social security

Russia’s tax and social security system will undergo reform as part of the country’s development strategy to 2020. The latest plans were the focus of Wednesday’s cabinet meeting.

The task is to double incomes, increase industrial efficiency and raise pensions. From 2010 the government will abandon its unified social tax and instead levy premiums for pension insurance. Prime Minister Putin indicated there would be extra costs for business.

“The adoption of these decisions is not simple but very important – for the government, for employers and for citizens. It will permit the substantial expansion of pension guarantees for our citizens. And protect the stability of the pension system with a reasonable level of tax loading on the economy.”

The new system has led to concern about an increase in the tax burden. But Economic Development Minister, Elvira Nabiullina, says her department will work on measures to soften the blow

“The ministry of economic development and the finance ministry were given the task of developing measures to alleviate the tax burden. The government will subsidize small business and agriculture during the transition period.”

Speaking about the ongoing world economic crisis, Vladimir Putin said Russia is safe, adding that its gold and foreign exchange reserves will ensure stability.

But he called for the more active development of financial institutions and economic competitiveness.  Irresponsibility and inadequacy – that’s the appraisal Prime Minister Putin gave to the US authorities failing to curb the credit crunch. But he said, the global financial crisis is not a reason to change Russia’s strategic plans.