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The tax reform started yesterday. A member of the Duma Committee on Budget Alexei Mikhailov (the Yabloko faction) shared his views on the start of the reform with a correspondent from the "Vremya Novostei" newspaper Viktor Khmaryev.

Question: Now we have a single rate of income tax - 13%. In addition from January 1 Russian citizens will be not have to pay tax on education and health care expenditures. Do the authors of this reform believe that back-to-back, insurance and other schemes to conceal wages will become ineffective?

Mikhailov: This would have happened if the rate of the income tax had been backed by a regressive scale in the social payments that are accrued on wages. .

Q.: Are you referring to the social tax that the government plans to replace present insurance payments with?

Mikhailov: It is absolutely unimportant what this will be - tax or payments. The 40% of social payments accrued on wages are too high. They should be reduced to 20% at most. This can be done without affecting the population only through a regressive scale: those who earn more should pay a lower rate.

Q.: But the social tax proposed by the government contains a regressive scale: the employer will pay 35.6% of the social tax for a worker earning less than 100.000 roubles per year. For those who earn over 300.000 roubles per year, the employer will pay only 10%.

Mikhailov: This scale is regressive only in form. The Budget Committee of the Duma proposed adding one more line to this scale: those earning over 600.000 roubles per year should pay 2%. In addition the Yabloko faction proposed to levying the amounts spent not only on education and healthcare, but also on the purchase of a car, construction materials and spare parts both from income tax and social payments. In this way the incomes of rich and well-to-do Russian citizens could be brought into the open. However, the government did not adopt these proposals. Therefore shadow schemes will still remain preferable for the rich. And this is a pity, as the tax revolution was, at least in words, designed to bring the shadow economy into the open. But the revolution got clogged up at the very first step.