Mr Kudrin reported that next year’s draft budget allocated additional funds for the regions, specifically the receipts from a 1% profits tax and 50% of the excise tax on vodka and other spirits.
He also said that Russia would set up a fund to support the regions with a less sustainable taxable base.
He further said that, apart from the draft budget for 2004, a draft law on changes to the Budget Code, dealing with the establishment of a stabilisation fund, would be submitted to Parliament. Mr Kudrin thinks a permanent fund would make it possible to better predict the macro-economic situation in the country, to eliminate medium-term and long-term risks and increase trust in the Russian economy.
President Putin said that in some countries such funds are called “future generations funds”. If this institution begins to function fully, in his view, it will create a favourable psychological and economic climate around Russia. He stressed that in past years most currency receipts were used to repay foreign debts. Now, he said, was the time to channel these funds into the development of one’s own country and increase the effectiveness of the Russian economy.