Luxury is not for budget

“Introducing in Russia excises for luxury goods will scarcely increase budget profit,” — Ilya Trunin, Director of Taxes & Customs Tariffs Policy Department of the RF Ministry of Finance believes. “We will waste more only on the administration”, — they think in the Ministry of Finance, however they doesn’t refuse to consider the initiative of their colleagues. Mr. Trunin reminded that in the 90-ies they excised carpets, cut-glass wear & jewelry. “The excises depended on the price. It is difficult now to predict how such mechanisms could work today”,—he said. According to Mr. Trunin the theory of taxation says that excises should be levied on the goods the demand on which is “low – elastic”, i.e. not depending on the price their consumption level remains stable. Examples of such products are oil products & tobacco. “I can’t see no other goods of the kind at the moment”, — the head of the department told. The head of the Ministry for Economic Development Mrs. Elvira Nabiulina already revealed the Ministry’s plans to make a list of luxury goods liable for excises earlier this month. She reminded that in many countries excises are used for much more types of goods than in Russia. “They are products that are not included in the list of every day demand. This list can be very large in different countries. We excise only oil, oil products, alcohol & tobacco,”— she pointed. According to some mass media the Ministry for Economic Development thinks about excising jewelry, energy ineffective goods & even chocolate. One of the variants consists in partial restoration of the excises products list named in the excise law that expired in 2001. The issue of excising luxury goods has been put on discussion for many times. Last time the State Duma declined this law project this May. The parliamentary majority did not support the amendments to the Tax code of RF that suggested to acknowledge as luxury goods with differential 1%-5% rate such goods as elite living real estate, country houses & lots that cost more than 15 million rubles, automobiles, jets, helicopters, yachts, boats that cost more than 2 million rubles, and precious metals & stones, jewelry, paintings & sculptures with cost of more than 300 000 rubles. Specialists don’t rule out that in case the law will be approved it will trigger different tax evading schemes & shadow business growing.