Most of the developed and dynamically developing countries have been trying by different means to lower or at least not to raise their taxes during the crisis. Our Government once again chose a different road finding new ways to shift the burden of the crisis onto the citizens.
The Russian Finance Ministry has developed draft Fiscal Policy Guidelines for 2010-2012. On April 27 the draft was approved by the Governmental Commission for Budget Development. In addition to other issues the draft envisages amendments into the Tax Code of Russia enabling regional legislative assemblies to raise basic transport tax rates not by 5 times as the Code allows at present, but by 10 times.
In short, the vehicle tax in Russia may double from the beginning of next year. Thus, in a federation subject with the highest allowed margin of the transport tax a citizen presently paying annual RUR 4,375 (Ed. about USD 136) on a 125 hp vehicle will be paying RUR 8,750 (Ed.: about USD 273; whereas average wage in Russia amounts to monthly 15,200 – approx. USD 475 – as of January 2009) . A tax on a 170 hp vehicle will amount to RUR 17,000 a year instead of the present RUR 8,500. Taxes on powerful engines over 250 hp may exceed RUR 100,000 a year.
Obviously “the rich” will be able to pay such taxes even during the crisis. However, financially affected here is the middle class, as well as the least wealthy car owners. The Government proposes to the regional authorities (which have been trying to keep more or less low tax rate on vehicles below 100 hp) to link the tax rate with the year of manufacturing of the vehicle.
According to the Federal Treasury of the RF, regional budgets received 53 bln roubles of transport tax in 2008. Thus, the price of the question means dozens of billion roubles of additional tax burden on Russian households. And all this have been taking place in a situation of poor condition of highways, notorious corruption of traffic policemen and non-transparent expenditures of the funds based on the transport tax.
The Russian Government even does not want to conceal the fact that such measures have to replace reduction of financial assistance to the Russian regions in the form of subventions for regional budgets. However, such a way of support of regional governments means leads to direct detriment of the interests of many residents in these regions.
The statements that only a possibility for increase of the tax will be set up [by the federal law] are below criticism. There is no doubt that in a hard situation with regional budgets most of the regional governments will decide to raise the tax. However, they will also have to carry political responsibility for such unpopular measure.
Profiting from the so-called “stabilisation” or “improvement of well-being of the nation” that have been loudly proclaimed in the recent years, many families often used loans to buy new cars. News cars are environmentally more friendly, however, they are more powerful. Thus, such car owners will pay from their pockets for the pompous and capital incentive projects of the Russian authorities draining the regional budgets.
The YABLOKO party is certain that the amendment to the Tax Code of the RF allowing for an abrupt increase of the transport tax, if such is adopted, will finally result in mass-scale protest actions of vehicle owners. And this resentment will be justified.
YABLOKO is categorically against the increase of the transport tax and calls the Russian Government to turn down submitting of such draft to the State Duma of the RF.
Sergei Mitrokhin
Chairman of the YABLOKO party
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