Page 64 - RusRPTDec20

deficit has been increasingly focused on government borrowing.
In the consolidated budget, the collapse in oil and gas tax revenues eased in the third quarter, but these revenues were still 37% lower than a year earlier. Other budget revenues decreased by more than 8% year-on-year, which was clearly lower than in the second quarter (-14% excluding the April Sberbank settlement). On the other hand, the decline in budget revenues was still so large when taxes are paid to the budget later than the underlying revenues accrue to taxpayers. In addition, there are tax cuts and deferrals granted by the government in the spring. In particular, corporate income tax revenues remained low in the third quarter and VAT revenues continued to decline (VAT revenues are the largest item of budget revenue, or one-fifth).
There was some relief from the wage front in the tightening of budget revenues, Growth in budget expenditure on social benefits slowed in the third quarter, but remained at 13% year on year (18% in the first half of the year). The rate of increase in other expenditure also slowed to 10% from 17% in the first half of the year. Their real growth also slowed, while price rises remained relatively unchanged. Due to the interest rate crisis, health care has been at the forefront of the increase in spending throughout the year, with spending rising by a third year-on-year in January-September. Budget expenditure on business support and investment in the various sectors of the economy continued to grow strongly in the third quarter and by more than one-fifth year-on-year throughout the January-September period. In January-September, general government expenditure also increased by 14% from last year, and internal security and order expenditure by more than 10%.
6.1.2 ​Budget dynamics - specific issues...
Russian President Vladimir Putin hiked personal income taxes from its flat 13% for the first time in two decades ​with a decree signed on November 22. One of the first things that Russian President Vladimir Putin did on taking office in 2000 was to slash tax rates to a flat 13% for personal income, one of the lowest rates in Europe, and 24% corporate profit tax.​ ​VAT rate was already hiked from 18% to 20%​ in January 2019 and more recently the​ ​mineral extraction tax (MET) has been comprehensively reformed​ to more efficiently tax the extraction of metals and hydrocarbons. Starting next year, the personal income tax rate will rise from 13% to 15% on incomes over RUB5mn (about $65,800/€55,370 euros at the current exchange rate). Given the average annual income in October was RUB590,000 ($7,900) the change in the tax rate will affect a very small percentage of the population. The reform is expected to generate an additional RUB60bn, the president said, adding that the money would go towards funding treatment for children with "severe and rare" illnesses.
Russian oil companies would lose about RUB650bn ($8.4bn) in 2021-2025
64 ​RUSSIA Country Report​ December 2020 www.intellinews.com