‘The absolute digit is 3,2 trillion rubles’
The republic’s economy in general returned to its pre-pandemic level
The economy of the republic started to revive after the pandemic. This is what Rustam Minnikhanov who opened an expanded meeting of financial agencies claimed on 17 December. At the meeting with the Russian office of the Federal Tax Service, the office of the Federal Treasury and the Ministry of Finance summed up the Tatarstan budget expenditure in 2021. Russian Finance Minister Anton Siluanov and Vice Chairman of the Federal Tax Service Viktor Batsiyev also participated in the session. As the attendees confirmed, Tatarstan confidently takes the lead in the Volga region in tax collection and is in the top 10 most successful Russian regions in this respect. The guests from Moscow praised Tatarstan for smart financial administration and the success of the institution of self-employed people. Due to this, a new pilot project awaits our republic and some other Russian regions.
Economy started to revive after the pandemic
Opening the expanded session, Tatarstan President Rustam Minnikhanov thanked Russian Finance Minister Anton Siluanov for traditionally making time to participate in the event. The head of the republic said gross regional product was expected to grow by 103,8%: “The absolute digit is 3,2 trillion rubles.”
The industrial production index is 108,3%, or 3,765 trillion rubles, construction works total 103,1%.
“Also, there is a lot of federal money in national projects and other support measures,” he noted.
Retail turnover also shows a rise, 106,2%.
“We expect investments in working capital to be some 660-670 billion,” the speaker noted. Minnikhanov thinks these indicators are “a result of the beginning revival of the economy after the acute period of the pandemic.”
He thanked the Russian president and the country’s government for unprecedented support measures for businesses in employment and orders during the tough times. At the same time, he admitted that not all enterprises had recovered completely: “Statistically, some 23% of organisations are operating at a loss.” As it was said, the republic’s own incomes are expected to be 333 billion rubles: “Given the federal programmes, the incomes will be around 414 billion.” And expenses are considered to amount to about 416 billion.
The Tatarstan president thinks that now it is important to save the positive dynamics of the economy. Also, it is important to continue working with reserves, unprofitable enterprises (measures designed to resuscitate them are meant) and, of course, with the debt. Rustam Minnikhanov said that in 2021 the republic repaid all budget debts: about a third of expenses from this sum is salaries considering those tasks given by the Russian president’s May decrees.
It is assumed that national projects will cost over 34 billion rubles. 25,4 billion of them is money from the federal budget and 8,7 billion is the money from the republican budget. But the most important thing, the Tatarstan president reminded the audience, is that it is necessary to spend all this money till the end of the year and put all planned facilities into operation. Minnikhanov noted that all goals and indicators of national projects needed to be achieved in a way that Tatarstan could provide the republic’s total involvement in them in 2022.
The Tatarstan president reminded them that the republic’s budget for 2022 had been adopted: “It is tense. The deficit is 24 billion. We have to cover it with reserves.” According to him, municipal budgets were going to be adopted until 20 December, so he warned leaders of districts and cities that the budgets couldn’t have a deficit.
Most indicators outstrip pre-pandemic numbers
Head of the Tatarstan office of the Federal Tax Service Marat Safiullin, in turn, stressed that the economy of the republic not only recovered but also most indicators outstripped pre-pandemic numbers. He says it became possible to raise tax incomes thanks to oil prices and the efficiency of tax administration.
“By our estimates, the treasury will grow by over 1,1 trillion rubles this year,” Safiullin said. “This is significantly bigger not only compared to the last year but also 2019 before the pandemic.”
Considering that taxes depend on businesses’ financial results, the activity of the economy seems to have really recovered. The petrochemical complex, as Safiullin emphasised, has been the leader of tax payments during the year. However, he added some sad notes to such a glittering picture. It turned out that at the same time there were sectors that decreased indicators compared to the last year. Analysis showed that growth of investment costs and a fall in the number of public contracts are the reason.
There is a reason for pride — the record-high tax collection reinforced Tatarstan’s leadership in the Volga Federal District in tax incomes. But such “an extraordinary challenge” as the pandemic makes itself known: the most affected sectors needed state support measures. According to Safiullin, in November and December, they received financial assistance equal to one minimum wage per worker of the organisation and sole trader via the Federal Tax Service.
A fall in oil prices, which has been registered since the third decade of November, can be another serious negative factor for the economy of the republic, the speaker noted.
Safiullin notes that VAT is forecasted to rise by a third compared to the last year. The republic’s anchor income tax is expected to rise not only in comparison with the last year but also in 2019.
“The recovery of the economic activity and high oil prices are key growth factors, which had a positive impact on businesses’ profitability,” the head of the Tatarstan office of the Federal Tax Service claimed.
As it turned out, the growth of income tax on natural persons in the budget is not only the highest in the last years but also is significantly above the salary dynamics: Tatarstan is the district’s confident leader in this tax collection. Addressing Siluanov, Safiullin noted that the rise in the income tax on natural persons by 15% for incomes over 5 million totally justified itself. So this year, here 1,3 billion rubles are expected in the federal budget.
Self-employed come out of shadow
The main Tatarstan tax worker also said with satisfaction that the institution of self-employed became popular in Tatarstan. 167,000 people have such a status today: their amount is 1,8 times higher than that of sole traders. Even the sum of the tax on professional income, as he thinks, is already “ big enough”: tax workers assess it is due to nearly a billion rubles this year.
Tax collectors don’t forget inveterate tax dodgers. This year, the Investigate Committee has opened 37 criminal cases for over 4,8 billion rubles. Moreover, 1,14 billion of this sum has already been received in the budget. The head of the Tatarstan office of the Federal Tax Service especially stressed that the most important thing for them wasn’t to punish a taxpayer but to make sure he voluntarily paid taxes. This is how the local office of the tax service hopes to receive 1,7 billion this year, without fines, which is by a quarter more than last year. Safiullin also promised to be in touch with taxpayers via informative and convenient services. He reminded them that transport and land tax declarations were cancelled in 2021. Such a practice will gradually apply to other taxes too.
As evidence of this, a new tax regime for microbusinesses — the so-called automated simplified taxation system — will start running next July in test mode in Moscow, Moscow Oblast, Kaluga Oblast and Tatarstan. Those who have no more than five staff members and whose incomes don’t exceed 60 million rubles can use the regime.
“Yes, it has higher tax rates, but in the current simplified system, a business will get, firstly, zero insurance premiums, secondly, no tax reporting (tax workers will calculate it themselves) instead,” the head of the Tatarstan office of the Federal Tax Service noted.
It is expected that natural persons will replenish the treasury with 8 billion rubles. In this indicator, Tatarstan is again the leader in the Volga area. Safiullin says that they are waiting for 7,13 billion till the end of the year, it is nearly 90% of the sum. Also, 17 billion rubles will be charged forcibly. Bankruptcies will be launched against those who refuse to pay. However, in this case, the enterprise isn’t exempt from debt. If beneficiaries of 71 enterprises were brought to the court last year, this year, they total over 109. The debt recovered from bankrupts, which was considered a dead-end earlier, was 807 million rubles in 10 months of this year. It is 2,2 times more than last year.
Keeping Safiullin’s words about the success of the institution of self-employed people in mind, the Russian finance minister noted that “it is great that the simplified taxation system is developing too.” However, he asked to clarify if this was the legalisation of those workers who used to work illegally or larger businesses became smaller to optimise the taxation system. In Russia in general, he said, it is the most popular taxation system: 3,6 million people are already involved in it. Safiullin rushed to make the Moscow guest happy. According to him, the analysis showed that 77% of newly registered self-employed people were people who hadn’t been registered anywhere, in other words, they legalised their businesses.
“We think the tax on professional income justified itself,” he concluded. He thinks Tatarstan has achieved a good result in this respect.”
Tatarstan Finance Minister Radik Gayzatullin said that it is expected to receive 15,7 billion in taxes in the Tatarstan budget in 2021 (112,9 in 2019). 8,3 billion of this sum will be in the republican budget, 7,3 billion — in local budgets. It is planned to end the year with positive results.
The road from Moscow to Kazan will be built on time
Vice Chairman of the Federal Tax Service Viktor Batsiyev was another guest from Moscow together with the Russian finance minister. The functionary noted that the centre saw a significant rise in tax payments from Tatarstan. This happens both because of the economic recovery and change of tax legislation somewhere. “Without doubt, because of the better tax administration, which is already high,” Batsiyev paid tribute to his colleagues’ work.
“If we simply compare the tax collection dynamics in the Volga region, the growth in the budget was 155% in 2020, while in Tatarstan, this rise reached 171%. That’s to say, it is 16% better than in the district on average,” he stressed.
While the absolute share of tax payments of the republic in the Volga area is 23%, which is the first place. Earlier, head of the Tatarstan office of the Federal Treasury Rustam Nuriakhmetov said that 1,506 trillion were transferred to the Russian budget (149% in 2020). The amount of payments to the budget excluding interbudgetary transfers rose by 494 billion rubles compared to 2020 and reached 1,324 trillion (by 160% compared to last year).
Batsiyev also noted that Tatarstan was always a flagship of those innovations the management of the Federal Tax Service with the Ministry of Finance developed. This includes the experiment on launching the regime of self-employed people: “This positive experience is valuable.” This is why the pilot project in the new tax regime launched in four regions will include Tatarstan too.
In reply to Minnikhanov’s request to assess their performance, Siluanov provided specific numbers. The republic ranks fifth in Russia (excluding Moscow and Petersburg) in socio-economic development indicators in 2020 (the results for 2021 haven’t yet been known), second in the investment climate, fourth in quality of life. While the quality of finance administration provided Tatarstan with leadership in the Volga Federal District. He thinks this means the system is accurate and the republic is one of the most attractive regions from a perspective of investments and economic activity.
According to the Russian finance minister, Tatarstan always takes advantage of the opportunities the federal centre provides. He urged the region to keep this in mind in the future and announced “truly unprecedented measures to stimulate infrastructure development”. It is new infrastructure loans.
“Over 10 billion rubles from the first transfer of such loans will come to the region,” he promised.
The Moscow guest also reminded the audience that Tatarstan actively worked with those loans the republic had been given earlier. They can be used for new investment projects and will reduce the region’s debt burden: “We worked with the region for almost 20 billion rubles.” Also, there are additional resources of the Housing and Utilities Services: they provide a lot of money, 150 billion rubles, for utility infrastructure. The projects will kick off next year.
Finally, the money of the National Wealth Fund. By Siluanov’s estimates, it is also “unprecedented volumes”: “We have never had this in history. 2,5 trillion rubles will be invested in the economy during three years.”
This money will be used for roads that are built in the republic, first of all, the Moscow — Kazan highway. Minnikhanov reminded them of the road from Shali to Bavly. The finance minister confirmed this:
“Yes, it is a federal road. Together with Mr Minnikhanov we made increased commitments and meet them. We will continue building the road to Yekaterinburg, despite the rise in price. The length will increase and expand, there will be adjacent infrastructure. Everything will be done on time and fully.”
Rustam Minnikhanov, in turn, thankfully mentioned huge injections every region received, including Tatarstan, within national projects.
“The M12 project is a 6,5-hour trip to Moscow. The M7 road is fully used. And it will go not only to Moscow but also to Yekaterinburg (other options are considered further), we must finish the project by 2024. Our territory is some 142 kilometres. The works go on everywhere. The bridge across the Volga River is the key moment. The second issue is to connect the M5 and M7. We already see light in this corridor to China, in the section of the road from Shali to Bavly. In fact, a lot has been done there. Strategically, this highway is life-changing for our region,” the president expressed his attitude.