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  Wednesday, October 23, 2019
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VAT could be reduced to a flat 15%-16%
VAT could be reduced to a flat 15%-16%, a Russian presidential adviser told reporters Tuesday. Arkady Dvorkovich, head of the Kremlin's board of experts, said it would be realistic to lower the VAT rate, currently at 18%, two or three percentage points in 2007, arguing that even such a minor tax cut would result in tangible benefits for companies. Dvorkovich also said the 10% concession rate for socially important goods should be scrapped but that the government would have to take additional measures to prevent price spikes. The presidential adviser said a resultant short-term upsurge in inflation would be hard to avoid, but that "as practice shows, the prices will begin to fall again in three months." He said there were no economic prerequisites for price hikes and that prices would be leveled by competition and retail markups. Dvorkovich also said that over time, VAT could be brought further down, to 13% if economists proved the cut would not harm the budget. He said there was no link between VAT cuts and world oil prices and that the budget should remain balanced even if the prices were low. Dvorkovich's statement was made against the backdrop of heated Cabinet debates, in which Prime Minister Mikhail Fradkov pushed to slash VAT to 13% at a cost of $13 billion in opposition to government liberals Finance Minister Alexei Kudrin and Economics Minister German Gref, who called the proposed cut fiscally irresponsible.
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