The government will cut the payroll tax, Russia's core corporate tax, to 30 percent from 2012 from the current 34 percent, and to 20 percent for some types of small business, President Dmitry Medvedev said on Friday.
"A decision was taken to cut the highest rate of obligatory insurance payments from 34 percent to 30 percent from next year," Medvedev told the St Petersburg Economic Forum.
"For small business operating in production and social spheres to 20 percent. This is not a radical cut but a momentous and profitable step for a huge number of small and medium-sized companies."
In 2011, the government boosted the level of payments which companies contribute to social funds depending on the amount of their employees' salaries to 34 percent, from 26 percent in 2010. The government had expected to gain 700-800 billion rubles as a result of raising the tax.
But leading local economists say that stimulating consumption to spur economic growth no longer works in Russia and the government should concentrate on stimulating production.
Medvedev has also said that a lower tax will increase Russia's investment potential.
