President of Russia Vladimir Putin: Good afternoon Mr Titov. Have you prepared your report?
Commissioner for Entrepreneurs’ Rights Boris Titov: Yes, Mr President. I am ready to present what will be my third report since my appointment as Commissioner for Entrepreneurs’ Rights.
This report is based on 26,000 complaints and suggestions, the total of which has increased. In addition we have conducted over 60 special situational analyses around Russia and sociological surveys.
Vladimir Putin: Do the results of sociological surveys differ from your own observations?
Boris Titov: I believe that, in principle, they are consistent with the general understanding of the situation in the country, which is noted for its economic challenges and economic factors are at the forefront of people’s minds.
These issues include primarily domestic market demand, the ruble exchange rate and a very high interest on loans for businesses.
Unfortunately, we also have to deal with our traditional problems, and the most notable of these problems is the increase in inspection activity. Unfortunately, we are finding that the number of inspections is increasing despite the difficult economic situation. The number of planned inspections has decreased, while the number of spot checks has grown since last year. According to statistics, 10 percent of all businesses have had at least 7 inspections over the last year.
I am sorry to say that the number of criminal cases has increased, contrary to our expectations.
We recorded an increase in the number of such cases in 2015, and according to the Interior Ministry, the number of cases initiated for fraud this year has increased by 25 percent. In short, this is an alarming trend.
You have set the goal of reversing this trend and instructed us prepare a legislative initiative to increase law enforcement officials’ responsibility for initiating criminal proceedings without good reason and even for making procedural mistakes. As per your instructions, I am ready to submit a draft law today that would increase criminal and administrative liability, up to disqualification, for concrete violations.
Vladimir Putin: You have also worked on analysing the tax and non-tax burden, and you had the idea of getting a clear picture of the total combined burden to see what impact it has on business, particularly small and medium-sized enterprises.
Boris Titov: Taxes rank sixth out of the various problems businesspeople mentioned in their responses to our questions. The problem is quite serious, even though it is becoming less of a concern for the business community.
Unfortunately, the results we see in terms of lowering taxes are offset by increases in non-tax payments. The work that has been done on non-tax payments should start bearing fruit very soon. We do need to decrease the number of non-tax payments, and also decrease their rates.
Vladimir Putin: So what then is in first, second and third place among the issues of greatest concern to the business community?
Boris Titov: Demand is in third place and the ruble exchange rate, which is volatile today, is in second place. The exchange rate has stabilised somewhat and is less volatile than it was at the beginning of the year, when we conducted this survey. In first place is economic uncertainty, something we didn’t really expect to come up.
In other words, the big problem for business today is that people don’t know what’s ahead. The situation is changing on the domestic market and in terms of imports. Businesspeople would like to see a clearer action programme, of course, which would provide clear indications of the new sources of revenue for our country and the business development trends.
Vladimir Putin: I realise that this is not enough, but nonetheless, the action the Government is taking to maintain macroeconomic stability forms the foundation for resolving all other problems.
Boris Titov: Macroeconomic stability is a very important task, but the business community nevertheless hopes to see more growth and a commitment to development and bringing in investment.
Vladimir Putin: None of this is possible without macroeconomic stability. I refer to inflation and above all the need to keep it down. I think that we all agree that we must continue working in this direction.
Boris Titov: Yes, this is absolutely so. Macroeconomic stability today is about bringing the inflation rate down. We can see the impact this work is having in that the ruble’s exchange rate has become more stable and is even showing signs of growth.
Vladimir Putin: But this does not make all businesspeople happy.
Boris Titov: Yes, I wanted to say a few words about this.
Vladimir Putin: Some are happy and some are not.
Boris Titov: Sociological surveys show that more than 80 percent of businesspeople say that the changes in the economic situation have not improved the situation in their business.
Vladimir Putin: Companies buying imported goods will not be happy with the situation, of course, but companies with costs in rubles and selling for export gain an advantage from the weak ruble. We need to strike a balance between the different interests here.
Boris Titov: Yes, of course, but above all, we need to find new sources of revenue. This includes new products that we can sell abroad, taking into account today’s exchange rate, and also the domestic market, where there are plenty of segments in which companies can replace imports with Russian-made goods. We are working on this.
Vladimir Putin: Yes, I saw this in your party’s political programme too.
Boris Titov: Yes, our political programme is growth-focused. We went into politics above all in order to improve the economy, and an economy focused on growth is called a growth economy, which is why we called our party the Party of Growth.
The report includes our view of how the economy should develop, as businesspeople are worried most of all about the economy’s future, and so we have set out our view on how we should pursue economic development in terms of finding new sources of investment, growth, and bringing in the capital flows.
Vladimir Putin: Good, thank you.