The policy of lessening the tax burden that has been pursued in the past few years has produced positive results, opened up additional opportunities for economic growth and increased revenues from taxes, Mr. Zhukov said at the Russia: Investments in the Growth Economy conference.
"Next year we will continue pursuing this policy," he said, "and the reduction of the Single Social Tax will be the main step in this direction."
According to him, this measure will complete the main part of the tax reform, after which "our tax system should remain stable for several years."
"The changes can occur only as far as VAT is concerned," he continued, "we will cut this tax and maximally eliminate the privileges."
Earlier, representatives of the Finance Ministry stated their intention to reduce the VAT rate to 16% beginning in 2006, and to introduce a unified rate for this tax.
On Monday, Deputy Finance Minister Sergei Shatalov told journalists that he had not ruled out the possibility that the VAT would be reduced to 15% if there was a favorable economic situation and higher revenues from taxes because of measures to improve the collection of taxes.
On January 1, 2004, the VAT rate was cut from 20% to 18%, and the preferential rate of 10% was retained for socially important goods.
The Russian government expects the reduction of the Single Social Tax next year to have "the same positive effect as the reduction of the income tax had in the past," Mr. Zhukov said.
"Some time ago, we reduced the income tax to 13% and introduced a single rate," he noted. "As a result, the budget revenues increased because of the broadening of the taxable base and greater collection of this tax."
According to him, even if the reduction of the social tax leads to a deficit of the state non-budgetary funds in the initial years, overall the measure will make it possible "to seriously improve the situation, first of all in the sphere of pay raises."
Beginning next year, the maximum social tax rate will be cut from 35.6% to 26%. At the same time, a four-tier regressive scale of this tax will be introduced instead of the current three-tier scale, Mr. Zhukov said.
