How is the property tax rate formulated?
The current rate on property generally ranges from 0.5% to 2%. However, this year, only 9 subjects of the Russian Federation have exercised their right to set this indicator at less than 2%, in 2017 there were 26 such subjects.
But, it should be borne in mind that at the same time, the tax burden also increases. Now its figures already reach 33%. As a result, entrepreneurs have to optimize their costs as much as possible, including the costs of the wage fund (PA). And this, in turn, experts say, increases the preconditions for the bankruptcy of small and medium-sized businesses, which, in 2018, grew by 5%.
As a result, instead of effectively forming the revenue side of the budget, the taxable base is reduced, and significant funds of the budget system are spent on social support for the increased number of unemployed. That is, obstacles are created to ensure the steady growth of real incomes of citizens and an increase in the number of people employed in small and medium-sized businesses, including individual entrepreneurs, up to 25 million people in accordance with the Presidential Decree dated May 7, 2018.
The size of the tax rate on the property: the decision
It was in order to reduce the tax burden and provide measures of state support to a business that the draft Federal Law “On Amendments to Article 380 of the Tax Code of the Russian Federation” was submitted for consideration.
According to the ideas of the project initiators, Russia will set the maximum tax rate for corporate property tax, the basis for which is the cadastral value of the property, for the period from 2019 to 2021 in the amount of 1.5% (instead of 2%). But those incomes of entities that are considered to be drop-outs will be compensated from the funds of the Reserve Fund of the Government of the Russian Federation. In addition, it becomes possible to use the funds of the National Wealth Fund in case of exceeding its size of 7% of GDP in the period from 2019 to 2021.
According to experts, at first glance, this is a fairly noble decision of the government, especially if we take into account the general state of the country’s economy.
It is also worth considering that the state usually does not discuss the investment climate with entrepreneurs. That is, for business as a whole, this is already a significant step forward.
Experts are sure that now the main problem of the population is their lack of interest in their rights. So, the statistics assure that more than half of the population of the Russian Federation does not even know what the VAT is and what its purpose is.
In addition, experts say that if the FOM’s burden is reduced, tens of millions of Russians will come out of the “shadow”, and their revenues in the budget will block its falling revenues from the rate cut. At least that’s what happened to the Americans during the Reagan presidency.