Russia Dumping the VAT for a National Sales Tax
Sounds like Russia is planning to move from a VAT to a national sales tax:
MOSCOW, September 28 (RIA Novosti) — Head of the Russian Presidential Administration’s Expert Board told journalists Wednesday on the sidelines of an investment conference in Moscow that the new sales tax instated to replace VAT will not be introduced before 2009.
“The projections have been made and the text (of the proposal) is ready,” Arkady Dvorkovich said, referring to the proposals that will be submitted to the cabinet.
He said, however, that the final decision “should be made by politicians.
“I, for one, believe that sales tax is preferable, while the biggest risks are involved in the uncertainties of the transition period,” Dvorkovich said.
VAT and sales tax are variations of turnover tax, but, whereas VAT is collected as a product moves down the line from producer to end consumer, sales tax is a consumption tax that is collected only once, at the point of purchase.
The current VAT rate in Russia is 18% with a preferential rate of 10% for “socially important” staple goods. Russia used sales tax in 1998-2003, simultaneously with VAT, but it was then abolished.
Dvorkovich had said earlier that VAT could be replaced with sales tax in March 2005, when the head of the Expert Board addressed the possible abolition of VAT in 2007 with the simultaneous restoration of a 10-15% sales tax.
Wouldn’t it be ironic if Russia, of all places — home of the Communist Manifesto, extolling the virtues of an income tax — adopted a national retail sales tax before the United States did?
I wonder if anyone in Putin’s cabinet has read the FairTax Book.
Russian politicians trying to implement a National Sales Tax is not a good endorsement for your system. Russian leaders are doing everything in their power to loot their country. If they want a national sales tax, it means they have found a good way of abusing that system for their own benefit.
American politicians are also planning to loot our economy, thus they developed the tax code. Are we skipping anything?