Photo: Konstantin Kokoshkin / “Kommersant”
The Central Bank said that the increase in VAT is one of the main reasons for the downturn in the economy in 2019. This is stated in the annual report of the regulator, published 23 Jun.
The Central Bank has reminded that Russia’s GDP by the end of 2019 increased by 1.3 percent compared to 2.5 a year earlier. The causes of the decline in the controller called weak external demand and limited OPEC+. Exports in real terms fell by 2.3 percent, the contribution of net exports stripped GDP growth of 1.4 percentage points.
The increase of VAT from 18 to 20 percent and the resulting rise in prices also had a negative effect on the economy because it led to the slowdown in consumer activity. Inflation in Russia last year amounted to 3 per cent, of which 0.55 and 0.7 percentage points were the result of the increase in VAT.
The increase in tax rate led to a reduction in value added in real estate transactions on the wholesale market and to trade. The VAT rise was the main reason for the increase in non-oil revenues, which last year soared more than 10 percent.
The basic VAT rate increased in Russia from 18 to 20 per cent on 1 January 2019. The value added tax is the first tax collection in the country and the main source of money for the budget in addition to revenues from oil and gas.
Video, photo All from Russia.