Russia's Cabinet to fill budget at expense of employers

Russia's Cabinet to fill budget at expense of employers

The insurance contribution rate will be increased to 30.8% in Russia beginning 2019. The corresponding decision was taken by the Russian government, the Economic Development Minister, Aleksey Ulyukayev, said.

"I think that this decision is final. Of course, it should be fixed in the form of a bill, it must be passed by the State Duma and signed by the President," he explained.

The head of the agency has confirmed the fact that the increase in the insurance contribution rate will also increase the tax burden on business, Vedomosti reports.

Last week, the Russian Finance Minister Anton Siluanov said that the insurance contribution rate may rise to 30.8% from 30% due to the decision to raise the insurance contributions to 5.9% in 2019 from the current 5.1%.

On October 20, the government approved the bill to keep the insurance contribution rate at 30% in 2019.

An associate professor of Stock Markets and Financial Engineering of RANEPA, Vasiliy Yakimkin, speaking with a correspondent of Vestnik Kavkaza, said that in the current crisis conditions the increasing pressure on business does not seem to be a good decision. "A business, which has already adapted to the current difficult Russian conditions, will stand. But for a business, which is barely making ends meet, it could be difficult," the expert explained.

Speaking about the industries that are in decline, in particular, the mechanical engineering, he pointed out that at the moment they need investments. "We need a diversified approach to this matter. The budget needs money, but they should not do it at the expense of business every time," the associate professor of Stock Markets and Financial Engineering of RANEPA believes.

However, he drew attention to the fact that an increase in the insurance contribution rate by 0.8% will allow to supplement the budget for a maximum of 100 billion rubles annually. In addition, the expert said that the chances of this law getting approved are close to 100%.

Advisor to the CEO of the 'Opening-Broker' brokerage house on macroeconomics, economist Sergey Hestanov, in turn, noted that the increase in the insurance contribution rate by 0.8% is not too high, but it may be the last straw for companies that are experiencing financial difficulties and have no significant profit.

At the same time, he stressed that until the Ministry of Finance brings the budget deficit way below 3%, a probability of adopting new measures aimed at increasing the fiscal pressure remains. The chances that this proposal will be implemented are rather high," he noted.

In addition, he noted that these measures will not be enough to replenish the budget significantly. "Currently, a set of measures aimed at increasing tax collection, is being implemented. These are innovations in the field of taxation and property, tax increases for transport, enterprises, and the salary fund," Sergey Hestanov concluded.