Kremlin.ru November 16, 2004 President Putin's Final speech at the XIV congress of the Russian union on industrialists and entrepreneurs Moscow, Hall of Columns
PRESIDENT PUTIN: It was very interesting for me to hear your speeches. Informative reports were made with an analysis of the current real situation in the economy, and they were critical, which is particularly important, and also debatable in some areas.
I will allow myself to speak very briefly about what are perhaps the most important aspects, although I noted everything else that I considered necessary. We will discuss this at a meeting of Government, I promise you.
The first thing that I paid attention to was administrative reform. Almost everyone who spoke here talked about such problems of making the economy less bureaucratic, corruption and so on. Of course, administrative reform is designed to overcome these problems.
Yes, I agree, not everything is arranged the way the Government would like, and you are right those who talked about this your criticism was correct. Several things have remained unchanged and lost, and there have been some errors.
Maybe it is good from the standpoint of the war on corruption, that established ties are disappearing, but from the standpoint of manageability, of course, several things need to be set right.
I must tell you frankly: it was intended I think that the vast majority of people here know about this that the ministry itself would deal with strategy and rule-making. Other sections in the management bloc would deal directly with managing state property agencies, for instance. A third group would deal with control. But practice shows that even the initiators and authors of this reform do not want to let go of the real functions of management, and are gradually taking more of this “blanket” for themselves, thus violating the principles that they declared. And this creates certain difficulties in management, in contacts with the Government, I see and understand this perfectly. And naturally, the Prime Minister and I will react to this.
Another important issue is Russia’s eternal question of land. There are many notes about this, and I will quote one of them. It gives a history of the issue: “Two questions arise in connection with this: has your position changed on this issue, i.e. secondary repurchase of land for companies?” I can say immediately that my position has not changed. And secondly: “We ask you to help the Government of Russia to finally determine its position on this issue in the context of your speech.” One of our colleagues who spoke here talked about the problems with the regions. And this is indeed what stops the Government from reaching a final decision on this issue. Fiscal interests and national interests for developing the economy are to a certain extent in conflict with each other, but I agree with you that the Government must carry this to its conclusion. Of course, we must not forget the interests of the regions, and we must find some coordinated decisions, but these decisions must be fair and justified from the standpoint of developing the Russian economy. I hope that the Government will soon complete this discussion.
Now for the next few aspects which I noted and consider to be very important.
Many of you talked about the necessity of diversifying our economy, and this is indeed one of the most important areas of our joint work. Certain changes are being made to legislation, primarily to tax legislation you know about this and the burden is being redistributed. Perhaps this is insignificant so far, but there is some progress, and you know this. Of course, the Government must act carefully to make sure that this redistribution does not undermine one of our main industries, the energy industry: oil and gas. But, I repeat, this process will continue in the future.
People here said that the tax burden is now 30% of GDP. It is difficult to calculate how much it really is. I believe that it is more than 30%. I don’t know where these figures come from some experts think that it is in fact higher. And this, of course, makes us think constantly about how to change this situation for the better. As you know, the Government has declared that it is necessary to further reduce the tax burden and stabilise tax legislation this was also discussed here today. I think that this must happen in the near future.
A great deal of criticism was heard, but there are still some positive things going on: it was mentioned that over the last six months, collection of tax on profit has already exceeded the collection of value-added tax this is positive progress. And this is a decision that has been developed together by the business community and the Government of the Russian Federation. Naturally, it must be regretted that in connection with administrative reform, there have been some breakdowns in communications in the dialogue between the business community and the Government on these issues. The mechanisms must be restored and I promise you that they will be restored, above all in the sphere of tax legislation and legislation on taxation. This sphere is extremely complex. Even here, in the speeches by our colleagues, the methods and assessments differed greatly. The common social tax has been reduced this is bad, because a deficit of social funds may arise. Excise duties on alcohol have been raised this is also bad, because the money disappears, at any rate quite frequently.
Other proposals were also made: to reduce the common social tax even further to 15%, and to send money from the stabilisation fund and even the Central Bank’s gold reserves to paying off this deficit and developing the economy. But I am not certain that the authors and advocates of these proposals have calculated whether these resources will be enough to cover the deficits of social funds and maintain social stability in the country. Is this money enough to influence the development of the Russian economy as a whole? And what can using accumulated resources in this manner lead to?
The truth is that we must spend as much money as we earn. And if, as a result of a favourable foreign economic situation, and the possession of natural resources that God has given us, we will put this money into the economy, then we will have problems today: not enough circulating assets, a lack of investment resources, and tomorrow, if we make even the smallest mistake in this area, we may not need this, because inflation will crush the Russian economy. These decisions must be balanced and precise. In any case, we must think very seriously about such proposals, and we must not rush.
And finally, the last point, which is a pleasing one. There was discussion here of introducing honorary titles for the business community. This could of course be considered, although I think that success in business, which is inevitably reflected in personal prosperity, in income and success, is already a major event in the life of any person: it is
self-actualisation. Undoubtedly, there are people who stand out not just for their success, but also for their services to the state, the people and the country
Someone here said that there was no one in this hall who would give awards to any entrepreneurs. I can’t speak for the others, but I would like to say that there is at least one such person here myself: I do this regularly, and I am prepared to think about the proposal for honorary titles, but I have always particularly enjoyed giving state awards of Russia to entrepreneurs who have indeed earned the attention of our people with their activity. And I hope that I will be given the opportunity to take part in such events again.
Thank you very much. I wish you all the best.
===== Nu, zayats, pogodi!
__________________________________ Do you Yahoo!? The all-new My Yahoo! - Get yours free! http://my.yahoo.com