By Gleb Bryanski
MOSCOW, May 17 (Reuters) - Russia's biggest business lobby asked Prime Minister Vladimir Putin on Monday for a moratorium on tax hikes and called for a mass privatisation program to plug the budget deficit.
Finance Minister Alexei Kudrin said last week that Russia should strive to achieve a balanced budget in 2015 through spending more wisely. He said if the country fails to spend wisely, the government will have to raise taxes, but did not elaborate.
'Kudrin had alarmed the business community,' said Alexander Shokhin, head of the Union of Industrialists and Entrepreneurs (RSPP), a lobby dubbed 'the oligarchs' trade-union' since it counts the country's richest men among its members.
'We have proposed to announce a five-year moratorium on any new tax hikes ... We believe that other instruments can be used to compensate for the poor spending efficiency, in particular mass privatisation,' Shokhin told reporters.
The country is still struggling with the legacy of privatisations in the 1990s, when a group of businessmen acquired state assets in natural resources sectors for a fraction of their market price.
Many beneficiaries of the 1990s privatisations are on the RSPP's board and attended the meeting with Putin, although others have fled the country or serve a prison, like Mikhail Khodorkovsky, a former owner of the bankrupt YUKOS oil firm.
'The time has come for a large-scale mass privatisation which can be both economically justified and socially fair,' Shokhin said. He said Putin did not express any objections to the proposal during the meeting.
At the height of the economic crisis in 2009, the government announced plans to privatise some state assets and published a list that included stakes in the shipping company Sovkomflot and several airports.
When the price for oil, Russia's main export commodity, bounced back, the talk about privatisation stopped and none of the assets planned for sale in 2010 has so far been sold. Meanwhile, the share of the state in the economy has grown.
Shokhin said the state could privatise stakes in oil company Rosneft and banks Sberbank and VTB. He said the state could cut its stake in these firms to below 50 percent, retaining control through 'a golden share.'
Russia plans to have a fiscal deficit equal to 5.2 to 5.4 percent of gross domestic product this year while still boasting one of the world's lowest personal income tax rates and a relatively low corporate profit tax.
The country receives the bulk of its revenues from crude-oil related taxes and duties, with a value-added tax the second biggest source of revenue. Next year it plans to raise the social security tax to compensate for recent pension hikes.
(Writing by Gleb Bryanski; Editing by Dan Grebler) Keywords: RUSSIA TAXES/LOBBY (gleb.bryanski@reuters.com ; +7 495 775 1242; Reuters Messaging: gleb.bryanski.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
MOSCOW, May 17 (Reuters) - Russia's biggest business lobby asked Prime Minister Vladimir Putin on Monday for a moratorium on tax hikes and called for a mass privatisation program to plug the budget deficit.
Finance Minister Alexei Kudrin said last week that Russia should strive to achieve a balanced budget in 2015 through spending more wisely. He said if the country fails to spend wisely, the government will have to raise taxes, but did not elaborate.
'Kudrin had alarmed the business community,' said Alexander Shokhin, head of the Union of Industrialists and Entrepreneurs (RSPP), a lobby dubbed 'the oligarchs' trade-union' since it counts the country's richest men among its members.
'We have proposed to announce a five-year moratorium on any new tax hikes ... We believe that other instruments can be used to compensate for the poor spending efficiency, in particular mass privatisation,' Shokhin told reporters.
The country is still struggling with the legacy of privatisations in the 1990s, when a group of businessmen acquired state assets in natural resources sectors for a fraction of their market price.
Many beneficiaries of the 1990s privatisations are on the RSPP's board and attended the meeting with Putin, although others have fled the country or serve a prison, like Mikhail Khodorkovsky, a former owner of the bankrupt YUKOS oil firm.
'The time has come for a large-scale mass privatisation which can be both economically justified and socially fair,' Shokhin said. He said Putin did not express any objections to the proposal during the meeting.
At the height of the economic crisis in 2009, the government announced plans to privatise some state assets and published a list that included stakes in the shipping company Sovkomflot and several airports.
When the price for oil, Russia's main export commodity, bounced back, the talk about privatisation stopped and none of the assets planned for sale in 2010 has so far been sold. Meanwhile, the share of the state in the economy has grown.
Shokhin said the state could privatise stakes in oil company Rosneft and banks Sberbank and VTB. He said the state could cut its stake in these firms to below 50 percent, retaining control through 'a golden share.'
Russia plans to have a fiscal deficit equal to 5.2 to 5.4 percent of gross domestic product this year while still boasting one of the world's lowest personal income tax rates and a relatively low corporate profit tax.
The country receives the bulk of its revenues from crude-oil related taxes and duties, with a value-added tax the second biggest source of revenue. Next year it plans to raise the social security tax to compensate for recent pension hikes.
(Writing by Gleb Bryanski; Editing by Dan Grebler) Keywords: RUSSIA TAXES/LOBBY (gleb.bryanski@reuters.com ; +7 495 775 1242; Reuters Messaging: gleb.bryanski.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.