The government has begun preparations for the execution of the President’s Address to the Federal Assembly

The White House has begun preparations for the execution of the President’s Address to the Federal Assembly. On Friday, March 1, at a government meeting, Prime Minister Mikhail Mishustin handed out the first instructions and formulated the key directions of the Cabinet’s work for the coming six-year period. In general, Deputy Prime Minister and Head of the Government Staff Dmitry Grigorenko has been entrusted with overseeing the work of monitoring the implementation of the initiatives put forward. So far, there are few specifics in the action plan being formed by the White House – Deputy Prime Ministers Tatyana Golikova and Marat Khusnullin have been tasked with “taking control” of the fulfillment of promises to support families with children and improve their living conditions. The potentially large-scale topic of a more equitable distribution of the tax burden, the implementation of which could result in an increase in personal income tax and income tax for high-earning citizens and corporations, is not yet mentioned in the White House’s outlines.

The first meeting of the government after the announcement of Vladimir Putin’s message to the Federal Assembly on Thursday, as expected (in addition to the current White House agenda), was devoted to approaches to the implementation of the outlined plans. Prime Minister Mikhail Mishustin instructed deputy prime ministers and ministers to “take control as quickly as possible” of the implementation of the plan for the period until 2030 – despite the fact that, let us remind you, according to the Constitution of the Russian Federation, the government faces the newly elected president (elections, we recall, will be held on March 15–17 ) will have to resign. In the meantime, the execution of the message in the White House, according to the instructions of Mikhail Mishustin, will be supervised by Deputy Prime Minister and Chief of Staff of the Government Dmitry Grigorenko.

Let us clarify that the Prime Minister’s instructions on individual areas will appear in more specific departments and time frames – now we are talking about preparing proposals on the procedure for implementing plans and forming a detailed list of activities.

However, an equally important issue is determining the amount of financial resources necessary for the upcoming work – the Ministry of Finance will calculate the costs when preparing the budget for 2025–2027, and will also additionally give the “price of the issue” for the upcoming six-year period as a whole. So far there are only expert estimates of the “cost” of the message – for example, according to Rosbank analysts, taking into account the already budgeted expenses for 2024–2026, it could be approximately 12.8 trillion rubles, and including losses from tax benefits – 14–15 trillion rub.

Let us note that until now the financial plans of the Ministry of Finance have not provided for such large-scale budget injections. The “Main Directions of Budget, Tax and Customs Tariff Policy” for 2024–2026, published in the fall of 2023, indicate that this year the expansive budget policy will continue with an increase in spending, but in 2025 it should have normalized with a reduction in both revenue and expenditure parts, budget rules should work in full force, and the country, after a period of adaptation to new conditions, will finally begin to “live within its means.”

The second and only “thematic” instruction voiced at the government meeting concerned supporting families and improving living conditions.

This area includes the launch of a new national project “Family”, an increase in personal income tax deductions for the second, third and subsequent children, an extension of the “Family Mortgage” at 6% per annum until 2030, as well as the development of special mortgage conditions for small towns and regions in which new housing is either not being built at all or is being rented out in small quantities. Mikhail Mishustin instructed relevant Deputy Prime Ministers Tatyana Golikova and Marat Khusnullin to keep “control over all issues in their areas.”

Other key areas of work to implement the message, Mikhail Mishustin named ensuring the training of qualified personnel lacking in the economy, launching projects of technological sovereignty, stimulating investments in scientific developments, digitalization (which will be supported by the new national project “Data Economy”), improving the business climate (including credit holidays for small and medium-sized enterprises for a period of up to six months – once every five years and without deterioration of credit history) and a complete transition to a risk-based approach when conducting inspections.

The prime minister also called for a “focus” on solving problems in the healthcare system and food security, on taking “steps” in the field of creating new materials and chemical compounds, as well as on developing “globally competitive products.” Support has been confirmed for the regions in the form of writing off part of the debt on loans previously issued from the federal budget, as well as the extension of individual programs for the ten most economically depressed regions until 2030.

It should be noted that at the meeting, the topic of the modernization of the tax system promised by the president was not even mentioned – the configuration of the reform, which, as was said, involves a transition to “a more equitable distribution of the tax burden towards those with higher personal and corporate incomes” and reducing the burden on less affluent families remains unclear.

The Ministry of Finance, which announced the study of this issue, outlined a very vague time frame for the process (“this year”). As presidential press secretary Dmitry Peskov noted on Friday, in the near future, based on the results of the study, the “contours and outlines” of tax policy changes will be clear – the president, in his words, presented only “a conceptual view, and not a ready-made solution.” On the tax side, the prime minister only mentioned plans for a smooth transition of small and medium-sized businesses to a general taxation system without a sharp increase in the burden, as well as the need to develop parameters for the promised amnesty for those who, for the purpose of tax optimization, split up their businesses in order to maintain tax preferences.

Evgenia Kryuchkova, Vadim Visloguzov