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Kudrin: VAT Reduction Will Lead Economy from Overheat to Overglow
Reducing VAT from 18 percent to 12 percent that is advocated by the RF Economic Development Ministry will lead our country from overheat to overglow, said Finance Minister Alexei Kudrin.
“The consumption will be even higher,” Kudrin told journalists in the State Duma Wednesday, reminding that the consumption is ahead of the GDP growth already today.
“From overheat, we will pass to overglow of our economy. For the current situation, the reduction in VAT is the further warm-up, the increase in economy’s disproportion,” the minister emphasized.
According to Kudrin, the VAT reduction will be advantageous to intermediaries and trade, transport, services and telecom. But the cost will be the shortage of money for the pension system, education, public health and road construction.
Of interest is that Kudrin projects the net capital inflow to Russia for the second half-year. “In the environment of global financial crisis and its continuation, it isn’t easy to say what the inflow will be – the volatility is too high. I think there will be the inflow [in the second half-year], but I cannot specify its size,” the minister said.
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