26.04.09

Deputy Premier Aleksei Kudrin all but initiated a discussion of the 2010 budget parameters even though a formal start to the discourse would be given only at the meeting of the government Budget Commission on April 25. Kudrin outlined the central parameters and principles: state costs reduction by 1 trillion rubles and unchangeability of taxes. His opponents did not have to be told twice to challenge these premises. Mikhail Mokretsov of the Federal Tax Service reiterated his demand for a new tax on financial operations. Where he had demanded a 0.5% tax in the past, he suggested it amounting to 2% now. Presidential Aide Arkady Dvorkovich in his turn resumed the discussion over VAT reduction expediency.

"The Budget Commission will discuss parameters of the 2010-2012 federal budget soon now," Deputy Finance Minister Tatiana Nesterenko said. Her patron Kudrin added that the Economic Development Ministry was expected to come up with an updated macroeconomic forecast by then and that the three-year budget itself might be discussed next month. Kudrin said that some revision of the current budget was needed: state costs planned for 2010 would have to be cut by approximately 1 trillion rubles, and another 1 trillion rubles worth of state costs would have to be rearranged.

State costs in 2010 were planned at the level of 9.5 trillion rubles, just a trifle more than state costs in 2009 according to the latest version of the budget the Duma adopted on April 15. In other words, Kudrin wants state costs in 2010 restricted to approximately 8.6 trillion rubles. The deputy premier's words on the necessity to rearrange about 1 trillion rubles worth of state costs in the 2010 budget plainly show that the Finance Ministry intends to keep up in 2010 the anti-crisis funding strategy chartered for 2009. This year, the Russian state intends to pour about 3 trillion rubles into the anti-crisis program. Next year, however, its reserves are likely to be more depleted than they are now and that will jeopardize the ability of the state to finance anti-crisis measures (like recapitalization of banks).

Kudrin did not even say what he expected from the budget revenues in 2010. Actually, he was careful to do without macroeconomic forecasts at all - or without anything that might be interpreted as one. Addressing the conference of the Russian Business and Entrepreneurship Union yesterday, he would not even say when the Economic Development Ministry intended to provide the budget forecast. (For that, Kudrin referred those present to Elvira Nabiullina.) Anyway, the debates over the 2010 budget and the following 2011 one began right away.

As a matter of fact, all participants in the debates between 2006 and 2009 over "innovative scenarios" of development, changes in taxation, and pension sphere strategies agreed to differ again. Dvorkovich said the VAT might be reduced some. Kudrin immediately called it a populist statement and repeated that the Finance Ministry was stone-cold confident that taxes should be left alone as they were. Nabiullina meanwhile seconded the VAT reduction idea.

The crisis seemed to have radicalized opponents. Speaking of the anti-crisis measures the state was taking in the labor market, Nabiullina said that the state had better abandon the policy of "job preservation at all costs" because it was but conserving "inefficiency in economy". (The report experts of the Institute of Modern Development had drawn for President Dmitry Medvedev not long ago contained essentially the same recommendations and analogous theses. The report was quite critical of the social policy of the Health Care and Social Development Ministry, ally of Kudrin's Finance Ministry for some months now.)

Some new participants in the debates over the budget clamor to be heard too. Speaking before the Russian Business and Entrepreneurship Union, Mokretsov said the Federal Tax Service continued to insist on taxation of financial operations run by companies and organizations. He said the new tax should amount to 2% of the transaction and that the money would come in handy to cover the Pension Fund deficit and return finances into national economy.

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Source: Kommersant