InfoAnda - Analysis: For Putin, tax reform could be harder than winning |

Pakistanis angry over detentions in Times Sq. case
Monday, May 24, 2010
ISLAMABAD – Relatives of three men detained by Pakistan for alleged links to the suspect in the attempted Times Square bombing say the men are innocent.
They

Taiwan denies boycotting Australian film festival
Thursday, August 6, 2009

AFP - Thursday, August 6TAIPEI (AFP) - - Taiwan's Beijing-friendly government on Wednesday denied boycotting an Australian film festival amid a row over the e

Merkel's support dips, regional ally resigns International
Thursday, September 3, 2009

By Sarah Marsh and Noah Barkin

BERLIN (Reuters) - Chancellor Angela Merkel suffered a double blow on Thursday as a senior party ally in east German

Minister seeks closure of anti-Berlusconi websites
Wednesday, December 16, 2009
ROME (AFP) - – The Italian government moved Tuesday to close down Internet sites encouraging further violence against Prime Minister Silvio Berlusconi, who

Asian markets mixed after Wall Street rally
Wednesday, March 18, 2009

By ELAINE KURTENBACH,AP Business Writer AP - Wednesday, March 18SHANGHAI - Asia's stock market rally seemed to be running out of steam Wednesday, despite an

AT&T CFO Lindner retiring, Stephens to replace him | | 5 March 2011
Harrell homer helps Vandy overtake Tar Heels at College World Series | 19 June 2011
Mexican gang members charged in U.S. consulate murders | | 10 March 2011

Dutch police arrest top suspect in German mafia killings | 14 March 2009

Forum Views () Forum Replies ()

Read more with google mobile : Analysis: For Putin, tax reform could be harder than winning |

Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Home Business Business Home Economy Davos 2012 Technology Media Small Business Legal Deals Earnings Summits Business Video The Freeland File Markets Markets Home U.S. Markets European Markets Asian Markets Global Market Data Indices M&A Stocks Bonds Currencies Commodities Futures Funds peHUB World World Home U.S. Brazil China Euro Zone Japan Mexico Russia India Insight World Video Reuters Investigates Decoder Politics Politics Home Election 2012 Issues 2012 Candidates 2012 Tales from the Trail Political Punchlines Supreme Court Politics Video Tech Technology Home MediaFile Science Tech Video Tech Tonic Opinion Opinion Home Chrystia Freeland John Lloyd Felix Salmon Jack Shafer David Rohde Bernd Debusmann Nader Mousavizadeh Lucy P. Marcus David Cay Johnston Bethany McLean Edward Hadas Hugo Dixon Ian Bremmer Mohamed El-Erian Lawrence Summers Susan Glasser The Great Debate Steven Brill Geraldine Fabrikant Jack & Suzy Welch Breakingviews Equities Credit Private Equity M&A Macro & Markets Politics Breakingviews Video Money Money Home Tax Break Global Investing MuniLand Unstructured Finance Linda Stern Mark Miller John Wasik James Saft Analyst Research Alerts Watchlist Portfolio Stock Screener Fund Screener Personal Finance Video Money Clip Investing 201 Life Health Sports Arts Faithworld Business Traveler Entertainment Oddly Enough Lifestyle Video Pictures Pictures Home Reuters Photographers Full Focus Video Reuters TV Reuters News Article Comments (0) Full Focus Editor's choice A selection of our best photos from the last 24 hours. Full Article Images of December Best photos of the year Follow Reuters Facebook Twitter RSS YouTube Read Italian authorities end search for cruise ship bodies 10:40am EST Syria forces retake Damascus suburbs; showdown at U.N. | 7:58am EST Home prices drop, and consumers turn gloomy 11:16am EST In Facebook IPO, bankers seek prestige over fees | 30 Jan 2012 As Florida votes, Romney seems in driver's seat | 8:55am EST Discussed 137 U.S. outrage as Egypt bars Americans from leaving 74 U.S. raid frees two pirate hostages in Somalia 67 Gingrich, Romney play for cheers in Florida debate Watched Iran sends toy drone to Obama Sun, Jan 29 2012 Boy's foetus twin shock 12:14am EST Iran threatens action against U.S. Mon, Jan 30 2012 Analysis: For Putin, tax reform could be harder than winning Tweet Share this Email Print Factbox Factbox: Key quotes from Obama's State of the Union address Wed, Jan 25 2012 Related News Arctic ice melt lifts hopes for Russian maritime trade Fri, Jan 27 2012 Obama pitches tax, jobs ideas on campaign-style tour Wed, Jan 25 2012 Mixed reviews for Obama speech among Davos mighty Wed, Jan 25 2012 Obama backs shale gas drilling Wed, Jan 25 2012 Analysis & Opinion Tax and accounting this week Tax clips from the Web: Best states for business tax, slow IRS returns and a very wealthy candidate Related Topics World » Russia » Russian Prime Minister Vladimir Putin (C) speaks with workers during his visit to a railway wagon plant in the Leningrad region near St. Petersburg January 30, 2012. Credit: Reuters/Alexei Nikolsky/RIA Novosti/Pool By Jason Bush MOSCOW | Tue Jan 31, 2012 8:25am EST MOSCOW (Reuters) - Winning Russia's March presidential election could be the easy part for Prime Minister Vladimir Putin, who has called for a "decisive tax maneuver" to put the country's increasingly oil-dependent public finances on a more sustainable footing. Although Russia, the world's largest energy producer, ran a fiscal surplus last year thanks to strong oil prices, the high and rising price at which the budget balances poses the real risk of a fiscal crisis in the next six-year presidential term. "The Russian government needs to carry out a major budget consolidation over time," said Odd Per Brekk, the International Monetary Fund's resident representative in Russia. Without one, he warned, "Russia is much more exposed to an oil price shock." Since 2006, the volume of government expenditures has risen by an average of over 20 percent each year - double the rate of inflation. Their share of Russia's gross domestic product has rocketed from 29 percent to 39 percent. That now places Russia in the same league as relatively high-spending, high-tax European economies rather than low-tax emerging markets such as China and India. The challenge for Putin, assuming he takes office in May as appears highly likely, will be to squeeze revenues out of an economy that is already stuttering under a mounting tax burden. The so-called "tax maneuver," aimed at reducing taxation on entrepreneurs by shifting it onto under-taxed sectors and activities, is one solution gaining favour among policy makers. CRUSHING BURDEN Putin stated the rationale for the tax maneuver in a 5,000-word newspaper article on Monday. "We have reserves for increasing tax revenues in several directions: expensive property, consumption of luxury goods, alcohol, tobacco, the collection of rents in those sectors where it is currently low," he wrote. Putin has borrowed the idea from Business Russia, a lobby group for small and mid-sized businesses that backs selective tax hikes - on oil and gas extraction, tobacco and alcohol and property - to finance business tax cuts. "In Russia, those taxes that hinder development are either very high or very uncompetitive, and those taxes that don't hinder development are on the contrary very low," Alexander Galushka, president of Business Russia, told Reuters. Business Russia's initiative reflects widespread discontent over high payroll taxes levied on employers to fund ballooning state outlays on pensions, healthcare and welfare benefits. The government last year attempted to raise payroll taxes from 26 percent of employee salaries to 34 percent. Following a backlash from business, it scaled back the rate to 30 percent, but businesses complain that the tax is still crushingly high. ROOM FOR MANOEUVRE In contrast, some other taxes - such as the 13 percent flat-rate of income tax - are incongruously low. Yet tax dodging remains a rampant problem, with around 40 percent of economic activity unreported to the taxman. "If they set a higher rate for rich people, that will increase tax evasion," said Evsey Gurvich, head of the Economic Expert Group, which advises the finance ministry. Officials are focusing instead on consumption taxes that are harder to evade. According to Business Russia, were Russia to raise its low excise duties on tobacco and alcohol to the European average, the government could raise an extra $35 billion in tax yearly. The taxman now takes only 51 roubles ($1.70) on a half-liter bottle of vodka and 9 roubles on a packet of 20 cigarettes. Business Russia also backs higher taxes on Russia's oil and gas sectors. "You're simply taking away rent - unearned income - which is fair from the point of view of the economy, and politically and socially just," argued Galushka. Most analysts are skeptical over the potential to squeeze yet more tax out of the oil industry, where high taxes are widely blamed for curbing investment and stunting output growth. But the case for upping the tax take from Gazprom, the state-controlled gas export monopoly, is more compelling. Gurvich calculates that the gas sector's share of value added paid as tax, around 35 percent, is less than half the 80 percent level paid by the oil sector. Closing that gap would raise an additional 1.5 percent of GDP - around $25 billion dollars per annum - in tax. The discrepancy is even more obvious when looking at the taxes paid by the metals and mining sector, where the average tax take represents around 25 percent of profits. "Oil is overtaxed, metallurgy is undertaxed, and the gas sector is in the middle," said Kingsmill Bond, chief strategist at Citigroup in Russia. STIFF OPPOSITION Russia may in practice have less wiggle-room than appears on paper. Higher excise duties could backfire by hurting the pockets of ordinary Russians. They also face stiff opposition from the tobacco and alcohol lobbies, which argue that higher taxation would encourage counterfeit production. Proposals to bring taxation of the gas and metals sectors closer into line with the oil sector would entail challenging even more powerful lobbies with good connections in government. "There is substantial potential to increase taxation of the gas sector, but the political feasibility is not substantial," said Gurvich. When it comes to metals, he said "only a minor increase is politically realistic," which would be "insignificant from the macroeconomic viewpoint." Nor would property taxes produce a bonanza. Russia's slow-moving bureaucracy has struggled for years with the complicated preparations needed to register and value property holdings. "It costs more to administer this tax than the tax collects. It collects very, very little," said Galushka. FISCAL CONDUNDRUM A more basic problem is that simply shifting the tax burden will not address the root cause of Russia's fiscal conundrum: ever-rising government spending. "The government should focus primarily on raising the efficiency of public expenditure," said Gurvich. "It concerns everything: public investment, public procurements, more focused social support, and pension reform." Without a convincing answer to such problems, businesses are wary about planning more than a couple of years ahead, said Alexei Shestoperov, a researcher at Moscow's National Institute for System Studies of Entrepreneurship. "The budget demands more and more resources and where are they going to come from? It's hard to understand," he said. (Reporting by Jason Bush, Editing by Douglas Busvine) World Russia Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above. Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Back to top Reuters.com Business Markets World Politics Technology Opinion Money Pictures Videos Site Index Legal Bankruptcy Law California Legal New York Legal Securities Law Support & Contact Support Corrections Advertise With Us Connect with Reuters Twitter Facebook LinkedIn RSS Podcast Newsletters Mobile About Privacy Policy Terms of Use Our Flagship financial information platform incorporating Reuters Insider An ultra-low latency infrastructure for electronic trading and data distribution A connected approach to governance, risk and compliance Our next generation legal research platform Our global tax workstation Thomsonreuters.com About Thomson Reuters Investor Relations Careers Contact Us Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

Other News on Tuesday, 31 January 2012
Palestinians blame Israel for exploratory talks' failure |
Netanyahu set to win party primary ahead of U.S. poll |
African Union fails to elect new chief |
Artprice eyes sales boost from online auctions |
Amazon unit may be moving into sporting goods |
Steve Jobs told Google to stop poaching workers |
Jennifer Lopez unsure on marrying again |
Madonna feels kinship with vilified Wallis Simpson |
Madonna plans 10 schools in Malawi with new partner |
Michael Jackson Cirque du Soleil show heads to Europe |
Syria forces retake Damascus suburbs; showdown at U.N. |
Insight: From darkest India, an enlightened leader |
Qaeda militants killed in Yemen air strike: residents |
Myanmar says it will put stability ahead of economy: report |
Iran vows to stop some oil sales as inspectors visit |
Brazil leader arrives in Cuba to talk trade, ties |
Toshiba cuts outlook after Q3 profit tumbles |
RIM committee stresses importance of independent chair |
AT&T reorganizes management positions |
HP director Babbio to leave board |
Tablet boom makes Apple No 1 PC maker: research firm |
Symantec says pcAnywhere safe, offers free upgrade |
Mexicans overcharged billions for phone, web: study |
Jack White steps out solo with new album |
Jennifer Lopez unsure on marrying again |
Julian Assange to guest star on The Simpsons |
The Help gets Oscar boost with big SAG wins |
Greece must pledge tough reforms for debt swap deal |
Italian authorities end search for cruise ship bodies |
Iran keeping option open on nuclear weapon: U.S. spy chief |
Libyan militia leader sues former UK spy chief |
Global food prices easing, volatility still high: World Bank |
Saudi Arabia cautious on possible Afghan talks |
Analysis: For Putin, tax reform could be harder than winning |
Global great power politics returns to Mideast |
Apple hires away Dixons chief to expand retail |
German court upholds ban of Samsung's older tablet |
Twitter CEO says new policy is for transparency: report |
Exclusive: Europe sets sights on deeper mobile roaming cuts |
EU regulators investigate Samsung over mobile patents |
Tellabs cuts more jobs chasing profitability |
Logitech's new Lifesize CEO targets growth pickup |
Nokia Siemens to cut 4,100 jobs in Germany, Finland |
Stephen Colbert's Super PAC raises $1 million |
Arctic Monkeys dominate UK's NME music nominations |
UK film, London theatre takings rise in 2011 |
Bolshoi Ballet Academy to see first U.S. graduate |
Greece at new risk of being pushed off euro
Bodies of missing Tenn. mom, Jo Ann Bain, and daughter found
Female Breasts Are Bigger Than Ever
AMD Trinity Accelerated Processing Units Now in Volume Production
The Avengers (2012 film), made the second biggest opening- and single-day gross of all-time
AMD to Start Production of piledriver
Ivy Bridge Quad-Core, Four-Thread Desktop CPUs
Islamists Protest Lady Gaga's Concert in Indonesia
Japan Successfully Broadcasts an 8K Signal Over the Air
ECB boosts loans to 1 trillion Euro to stop credit crunch
Egypt : Mohammed Morsi won with 52 percent
What do you call 100,000 Frenchmen with their hands up
AMD Launches AMD Embedded R-Series APU Platform
Fed Should not Ignore Emerging Market Crisis
Fed casts shadow over India, emerging markets
Why are Chinese tourists so rude? A few insights

USD EUR - 1 year graph	VPN on MacOSX	BlogMeter 1.01