World Bank advises Russia to boost taxes on alcohol, cigarettes

09:28, June 17, 2010      

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The World Bank recommends that Russia raise its duties on alcohol and tobacco, the RBC news agency reported Wednesday.

"There are few possibilities for lowering the taxes; on the contrary, there are possibilities to raise some of them," Zelko Bogetic, the World Bank lead economist for Russia, said while presenting the bank's report on Russia.

The economist said taxes are not a big hindrance for investment in Russia.

"There are many other problems in regulations and bureaucracy that clog the investments inflow into Russia, including those into its infrastructure," Bogetic said.

The Russian government should pay more attention to reviving small- and medium-sized businesses, the economist said.

Bogetic described the Russian tax structure as generally "healthy enough."

Another World Bank expert, Pedro Alba, said the UN agency would advise Moscow to increase taxes on tobacco and alcohol.

"They are the main reasons for high mortality in Russia. An increase of taxes on them is a way to strengthen the health of the population and it makes people happier," he said. "It also brings more money into the country's budget."

Russian Deputy Financial Minister Sergei Shatalov earlier offered to up the price for a bottle of vodka to 200 rubles (6.5 U.S. dollars) over the next three years. The cheapest vodka in Russia now costs the equivalent of 3 dollars a bottle.

The Russian finance ministry also proposed to increase the price for cigarettes by 30 percent annually during the next three years.

Source: Xinhua


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