The increase in the value-added tax (VAT) rate from 18 to 21 percent, which is being discussed by the government as one of the options for a future tax maneuver, will lead to an acceleration of inflation, a drop in real incomes and an increase in poverty. The corresponding conclusion is contained in the monthly monitoring of the economic situation in Russia, prepared by experts from the Russian Academy of Science and Technology, the Institute of Gaidar and VAVT. The report is available "Tapes. RU". According to experts, the short-term increase in prices with the introduction of a single VAT rate of 21 percent will be three percent. "What does it mean: the growth of poverty, which in the conditions of the already increased increase (from 15.4 million in 2012 to 19.7 million in 2016) and the decline in the incomes of the population is absolutely unacceptable," said in the monitoring. The most noticeable will be rising prices for food and medicine, as well as for goods for children. These categories are now taxed at a preferential rate of 10 percent. On March 30, the head of the Institute of Economics of the Russian Academy of Sciences Ruslan Grinberg called the tax maneuver "the delirium of the gray mare". In his view, the increase in VAT will lead to "robbing the poor" and will not launch economic growth in the country.

The tax maneuver, which is currently under discussion in the government, involves an increase in VAT and a simultaneous decrease in social contributions (the employer pays them three pension funds, compulsory health insurance and social insurance, a contribution of 30 percent from the payroll of each employee). Two schemes are proposed: "21/21" or "22/22", with VAT and social contributions equalized at the appropriate mark.

Original article: Unacceptable increase in the number of poor in Russia associated with tax maneuver.