Russian government officials met with President Vladimir Putin last week to discuss new measures aimed at boosting indirect taxation.
Putin has voiced preference for imposing a regional sales tax to an increase in VAT as a means of increasing budget revenues, according to a VTB Capital analyst who said a tax increase was unlikely to be implemented before 2016.
"The general government's budget surplus over the first five months of this year was almost twice as big as last year," the analyst said. "Moreover, next year looks particularly undesirable for tax increases in terms of timing, given the cyclical picture and stagflationary environment."
In addition, VTB said the imposition of a sales tax could hurt business confidence.
"And given the low fiscal multiplier, its overall impact on GDP growth would be fairly negative," the analyst said. "Moreover, the pass-through into inflation (+1.0-2.0pp to the headline CPI depending on the scope of regions and CPI items affected) would significantly complicate the shift to inflation targeting and prevent inflation expectations from being anchored, while potentially increasing risk that the government succeeds in diluting the CBR's independence."
News of Wednesday's meeting, however, has added risk to VTB's growth, inflation and rates outlook, the analyst said.
- EUROPEAN PARLIAMENT-NEWS: End-of-term assessment for the Juncker Commission
- EURASIAN DEVELOPMENT BANK: A meeting of the delegation of the Eurasian Fund for Stabilization and Development with the World Bank team
- NIKOIL - RUSSIA: URALSIB Bank took 15th place among banks in the RAEX-600 rating
- PRAVEX BAANK - UKRAINE: PRAVEX BANK joins EBRD Trade Facilitation Program to support foreign economic activity of Ukrainian exporters and importers
- PROMSVYAZBANK - RUSSIA: IE on USN 6% can pay taxes through the mobile application "PSB My Business"
- AG BANK: AGBank ASC is expanding its ATM network
- ATA BANK - AZERBAIJAN: It's time to make your trade online with AtaBank
- BTA BANK - KAZAKHSTAN: Regarding the seizure of property of the companies, controlled by M.K. Ablyazov
- ACBA-CREDIT AGRICOLE BANK: ACBA-Credit Agricole Bank to continue supporting SMEs
- ANELIK BANK - ARMENIA: IDBank Participates in Banking Union of Armenia "Financial Literacy and Skills" Program