Business should not raise prices because of rising VAT, according to the state Duma

© RIA Novosti / Natalia to Seliverstova in photobacteria of the State Duma of the Russian Federation. Archival photoBusiness should not raise prices because of rising VAT, according to the state Duma© RIA Novosti / Natalia to Seliverstova the image Bank

Russian companies should not increase their prices due to the increase of VAT since they do not reduce them when the authorities reduced taxes, said the Chairman of the Duma Committee on budget and taxes Andrey Makarov.

«There is a funny situation when we are many members, including large companies, saying that pricing is dependent on taxation. It turns out that it depends on the tax only when the tax is increasing. But when the tax is reduced, for some reason, the pricing is not affected», – Makarov said to journalists on results of the expert Council on taxes, which was held on Friday at the site of the Committee.

VAT in Russia was introduced in 1992. Then his rate was set at 28%, then, since 1994, the tax rate was lowered to 20%, and in 2004 it was reduced again to the current 18%. Now in the state Duma discussed the government bill on increasing the VAT from 2019 to 20%.

The MP has noticed that, when Russia canceled the sales tax, a proportional reduction in retail prices of any products was not observed. The same situation was when the authorities took the decision to reduce VAT.

«In 2004, at the peak of economic growth in the country the government found it possible to reduce VAT by 2 percentage points. I think it would be worthwhile to calculate the amount that over the years the business from reduced rates received,» — said Makarov. «The increased VAT rate — I really think that this is a return to the rate that was. There was a decline — by the way, nobody said it was forever,» he added.

The Deputy acknowledged that the increase in the tax burden nobody likes. However, for business development, he said, important not so much tax rates, as the permanence of the tax rules for a long period of time. «The rates can change, most importantly, that the rules of this rate has not changed during that period, which we consider important for business from the point of view of stability of the tax system,» – said Makarov.

The MP reminded that the President of the Russian Federation set the task to ensure the stability of the tax system for several years – and this was done, the tax environment for business has not changed. However, he stressed that other taxes will not be changed further. «Today when we talk about the fact that rejected other options – and the increase in personal income tax, and the possibility of introducing a sales tax, because it is the establishment of new parameters of the tax system for at least the next six years,» – said Makarov.

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