Alexei Venediktov: Mr Shuvalov, let’s talk about the rouble devaluation. What Minister Siluanov spoke about – maybe not in a very clear manner – has caused a stir. People have rushed to buy currency. People are snatching currency now.
Igor Shuvalov: Why are they doing this? They’ll miscalculate. No need to do this. First, the Minister of Finance did not say that the devaluation is or will take place. This is just one of those chills. He spoke about the exchange rate and explained what the Ministry of Finance and the Central Bank are going to do in the next few months and what new instruments they will use. But everyone interpreted these words as if the exchange rate will change and the rouble will become cheaper.
I can tell you that we’d certainly want the rouble to be a bit cheaper for the sake of our budget policy. In this case, we’ll have more budget revenues for fulfilling our commitments or carrying out separate programmes, such as infrastructure projects. But can the Government and the Central Bank use some instruments to instantly change the exchange rate?
Alexei Venediktov: They most certainly can.
Igor Shuvalov: No, they cannot. You should recall that in the past few years the policy of the Central Bank has followed absolutely transparent rules based on the corridor, dual currency basket and so on and so forth. Nobody will act today like an elephant in a china shop. Even if we could do something as you say nobody will let us do anything because the Central Bank acts as an institution. The bank’s institutional framework will not let anyone, be it the Government or law-makers, interfere in it.
So can the rouble become weaker? Of course it can. But it can also become stronger instantly. So I’d like to warn everyone who is going to engage in currency exchange without serving as a professional that this idle activity is most likely to lead to the loss of family incomes. The best thing to do is to rely on the rouble. We’ve always said that those who want to be on the safe side should divide their money into three equal parts – roubles, dollars and euros. Taken as a total, the cost of this money will always be the same regardless of exchange rate fluctuations. This is a fairly complicated approach.
The best thing for people who earn and spend roubles is to keep their money in roubles.
Alexei Venediktov: So what they are saying now – that the Government has decided to bring the dollar to 33 roubles and the euro to 43 roubles – is pure fancy?
Igor Shuvalov: Yes, this is just fancy, this is untrue. I have told you exactly the way that it is. If the rouble becomes a bit cheaper, this will be good for the federal budget revenues. But can we do something for this and will we do this? No, we won’t do anything because this is harmful. Therefore, the exchange rate will take shape by itself.
Alexei Venediktov: Are you saying that the positions of the Government and the Central Bank coincide?
Igor Shuvalov: The positions of the Government and the Central Bank coincide.
Alexei Venediktov: And the second issue that is being discussed now concerns income tax. As I see it, the treasury needs a lot of money and there isn’t enough, so they say that…
Igor Shuvalov: These are speculations. People asked me this question today, referring to the President’s statement. I read it attentively and then looked at what news agencies reported. They have confused everything once and for all.
When the President assumed office and formed the cabinet, he went on record as saying that the tax policy will remain stable. We will make decisions on the excise tax and luxury tax as we promised. The Government is now working on the excise tax and I hope that the State Duma will pass a law on the luxury tax before the end of its autumn session and that all of these decisions will enter into force by the beginning of next year.
As for other taxes, they will be better rather than worse.
Alexei Venediktov: Better for whom, Mr Shuvalov?
Igor Shuvalov: Better for taxpayers. First, the administrative system, this means interaction between the tax authorities and tax payers, should become simpler and more understandable. We are now working with Mishustin on specific and clear-cut plans for the Federal Tax Service with a view to present them to society every year. These plans explain how many documents should be submitted, how much time it will take to go through check-ups or report on paid taxes. We are bringing all of these procedures to certain standards and believe that in five years our tax administration will be one of the best in the world.
Last year our Tax Service made considerable progress according to Doing Business.
As for all other tax novelties, we’ll discuss them seriously for the next five years. We’ll discuss the best tax system for the next political cycle. The elections will take place in 2018 and a new government will be formed. This tax system should be optimal for the conditions that will take shape. We’ll see whether a flat tax rate has fulfilled its function. Given the public’s requirement for social institutions, should we continue to apply this flat tax or should we retain it for the majority of the population – say, 95% -- and introduce progressive taxes for people with super fortunes? This is the issue that requires discussion.
By the way, I know that for the superrich this won’t be a problem. Everyone is ready and a progressive tax will be introduced but this shouldn’t be done now. If the Duma makes this decision and it is endorsed by the President, this tax should be introduced on par with other novelties but no sooner than 2018. In other words, today we have all tax laws in their totality. They represent our tax system and it makes no sense to change anything in it. Otherwise, people will just get scared.
We’ll fulfil this work consistently as we promised and we won’t change anything for the worse until 2018. If there are no crisis phenomena, we’ll work normally and the Government won’t come up with any tax novelties. We’ll try to improve the tax system every year reducing administrative barriers and so on and so forth. As for the tax rate, including the income tax that you mentioned, if such a decision is adopted – I deliberately use “if” because this will be the result of a complex discussion – it must be introduced no sooner than 2018.
Alexei Venediktov: Now the last question about the President’s May executive orders. Those who follow the discussion are under the impression that – put together – these orders require much more money than the Government currently has.
Igor Shuvalov: This is untrue. We have the funds to fulfil the executive orders and we are now in the budgeting process. On June 24, the Prime Minister will conduct a meeting of the budget commission. There is money for these executive orders. This is not about its availability or absence. The point is that there are too many disputes. Should the funds be spent on increasing salaries if they are not linked with labour productivity? It is possible to argue forever. However, the President made his election promise and instructed the Government accordingly. It is our duty to fulfil his instructions. In any event, the Government will reserve the funds and carry out these executive orders in full. But there are disputes about whether such funds should be used to pay for poor labour, or maybe it would be best to channel them into investment projects. But these disputes are not related to executive orders. In this case, the Government has no room for manoeuvring and no desire to use these disputes as a pretext for not fulfilling executive orders. They will be carried out.
Alexei Venediktov: Thank you.
Source: the Ekho Moskvy radio station
