VOLUME OF BUDGET FUNDS IN 2005 TO EXCEED $100 BN

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MOSCOW, September 29 (RIA Novosti) - The volume of the federal budget funds in 2005 will exceed $100 billion, Russian Finance Minister Aleksei Kudrin said on Wednesday at a plenary session of the State Duma, while presenting a draft budget for next year. He recalled that four years ago the volume of the federal budget funds totaled $37 billion.

"Thus, the ponderability of our budget is significantly increasing," he stressed.

He called the main aims of the state's financial policy a stable economic growth, reduction of inflation, overcoming poverty and ensuring national security.

"The president's budget message specifies these aims as specific tasks for the formation of the budget for 2005 and the mid-term perspective," said the minister.

In particular, for the 2005 budget, the main tasks are maintaining macroeconomic stability, realizing structural reforms in the sphere of state management, optimizing the tax system through reduction of the tax burden on the processing branches of the economy at the expense of producing ones, said the minister.

The Russian government hopes that reduction of the Unified Social Tax next year will provide an additional 0.5% of economic growth.

"We expect this will give an additional impetus to the rates of economic growth by some 0.5% compared to what would be if we didn't reduce the unified social tax," said Mr. Kudrin.

Besides, by government calculations, the reduction of the unified social tax will give an additional growth of investments in the fixed capital next year by 1.5%, said the finance minister.

"Every year through such measures we maintain internal factors of economic growth, which would less depend on the favorable foreign situation," stressed Mr. Kudrin.

As reported earlier, the maximal rate of the unified social tax will be reduced next year from 35.6% to 26%.

Among such measures, the finance minister also mentioned the policy of increasing taxation of the raw materials sector conducted by the government lately. In his words, due to an increase in the severance tax on oil and introduction of differentiated export duties on oil, payments to the budget from the raw materials sector for the last 3 years increased sixfold. "Today it corresponds to improvement of the structure of revenues of the federal budget," stressed Mr. Kudrin.

At the same time, Russian Audit Chamber head Sergei Stepashin said on Wednesday in the State Duma when discussing the draft budget in the first region, the draft federal budget for 2005 does not allow resolving the task to double the GDP for 10 years.

In his words, many federal targeted programs in the draft budget "are not aimed at increasing the rates and quality of economic growth."

"Realization of the finance ministry's financial policy won't reduce the gap between the revenues of the poorest and the richest population strata," emphasized the head of the Audit Chamber.

This problem is "to be resolved through raising the living standards of the poorest strata," believes Mr. Stepashin.

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