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Meeting with Government members

November 11, 2019, The Kremlin, Moscow

The President held a regular meeting with Government members in the Kremlin.

President of Russia Vladimir Putin: Good afternoon, colleagues,

Before we get down to the main issue, I would like to discuss some of the current problems.

First of all, I would like to ask Mr Siluanov to tell us about the experiment being carried out on earned income tax. The suggestion was to have it with the minimal tax burden. How many people got involved in this system? How is the whole thing being administered?

First Deputy Prime Minister – Finance Minister Anton Siluanov: This year we are carrying out an experiment on the new tax regime – earned income tax. We call entrepreneurs working under this regime self-employed. The experiment was carried out in four major regions: Moscow, Moscow Region, Tatarstan and the Kaluga Region.

There are grounds to believe that this experiment confirmed that entrepreneurs showed an interest in the new tax system and that it was a success. Over 260,000 self-employed people were registered and the range of occupations was fairly broad. This is primarily transportation of passengers (about 18.7 percent of all self-employed were engaged in this business), construction (about 7 percent), renting out property (10 percent), and tutoring, to name just a few areas.

What was important about this and what was generally the aim of this initiative? We gave the entrepreneurs who are still working in the shadow, do not care to pay any taxes or get registered, an opportunity to work legally, to take out bank loans and receive government support which small businesses are entitled to. Our efforts produced results.

(Further on Mr Siluanov described some other details of the experiment.)

We propose that all regions of the Russian Federation should be given the right to adopt this initiative bit by bit starting next year. The regions should decide on the introduction of earned income tax. We suggest introducing this system in the strong and robust regions as of early next year.

During the first half of the year the Taxation Service will organise and streamline all its monitoring systems. Starting in the second half of the year all the regions will be entitled to introduce this tax system according to their decision.

Let me repeat once again that we believe that the experiment was a success and that the tax initiative is convenient for entrepreneurs. We think it will be spread further and be a success with the entrepreneurs.

Vladimir Putin: Mr Medvedev, what do you think about this?

Prime Minister Dmitry Medvedev: Mr President, we discussed this issue with representatives of the business community. They agree that the results are fairly good and suggest that this experiment, as was just described by the First Deputy Prime Minister, becomes a general rule.

Vladimir Putin: All right, agreed.

Mr Siluanov, my second question is about the next stage of capital amnesty. The law on capital amnesty has imposed an absolute ban on the use of tax returns filed during the capital amnesty for criminal prosecution. Yet, there were incidents when this did happen. The Supreme Court Presidium gave explanations. So, what is really happening?

Anton Siluanov: Yes, Mr President, we are now implementing the third phase of the amnesty. I would like to say that when the amnesty was underway, about 19,000 declarations were filed with the Federal Taxation Service, and the total worth of the declared assets (both money on accounts and foreign property) was almost 35 billion euros, which is a good result on the whole.

It is true that we had a situation when during a court hearing it became known that the investigative authorities got a permission of the court to demand a special tax declaration from tax authorities. This was the reason why we had to turn to the Supreme Court to get explanations regarding guarantees contained in the law on capital amnesty. On October 30 of this year the Supreme Court ruled it was strictly prohibited to use the declaration received under the capital amnesty as evidence in criminal cases.

The Supreme Court Presidium clearly stated that it was impossible for the tax services to provide other government agencies with access to the information filed in the declaration or attachments thereto (including based on a court ruling, as it happened during one of the cases this year); and secondly, that it was necessary to comply with the prohibition to use this kind of information as the reason to open a criminal case or as evidence in case a filer committed any crime under the Criminal Code. This fully complies with the concept of law on capital amnesty and, accordingly, with guarantees set in law. We believe the Supreme Court Presidium has ruled justly.

Vladimir Putin: It is necessary that the Government, the Economic Development Ministry together with entrepreneurs’ associations monitor closely what happens ‘on land,’ so to say, in practice, and respond based on the adopted law, which, as we can see, works quite well in the interest of the state in general.

We are completing the so-called road construction season. Each day, this country builds five kilometres of new roads and repairs 75 kilometres of existing ones.

What has been accomplished during the entire season?

Minister of Transport Yevgeny Ditrikh: Mr President, thank you for this question.

Indeed, we have virtually completed the 2019 road construction season. The plans for this year are very ambitious. In all, 27,600 kilometres of federal, regional and municipal roads should be repaired and overhauled. An additional 2,000 kilometres of new roads should be built, reconstructed or upgraded.

This year, we focused completely on regional and local road projects. Federal roads account for only 540 kilometres of the newly-built roads (2,000 kilometres), and the rest is regional roads. Regions and cities account for 20,000 kilometres of repaired roads (27,500 kilometres).

On the whole, the 2018 indicators have been exceeded by one-fifth, or 20 percent, as far as the regional network is concerned. This year, we are implementing road construction all over Russia. We focus on the southern sector, namely, the Moscow-Novorossiysk highway, the M4 Don highway, the A290 route between Novorossiysk and Kerch and, naturally, the Tavrida highway.

We consider it important to get rid of road bottlenecks by building roads to bypass cities, as well as new bridges and viaducts spanning railways with single-level crossings. This often causes social tensions due to more intensive train traffic.

For example, we are designing six bypass routes throughout 2019 in an effort to upgrade and expand the road infrastructure. These routes will make it possible to bypass Nizhny Novgorod, Ryazan, Volgograd, Khasavyurt, Derbent, Vladikavkaz, Ivanovo and Naberezhnye Chelny. And we will start building them next year.

We continue developing the network of toll roads. This year, over 50 billion in extra-budgetary investment went to build such roads. By the end of 2019, there will be almost 1,500 kilometres of toll roads in Russia, which is 36 percent more than last year. We plan to launch a barrier-free payment system with no gates, so that people waste no time at toll booths. Such system will be introduced on the Central Ring Road we are building in the Moscow Region.

We are also working actively on taking regional roads over and making them federal ones. Today it helps Russian regions to save up some money on these roads in order to repair the rest of the network. This year we are taking over more than 2,500 kilometres of roads from the regions.

I would also like to speak about the funding, Mr President. This year the regions are doing an unprecedented amount of work. In total, the regional road funds have today over one trillion rubles to carry out all kinds of work. Taking into account the state support, which accounted for 270 billion rubles this year (direct support from the federal budget), almost a half of this amount (270 billion) was spent on the implementation of the Safe and High-Quality Roads national project. I would like to say that almost all this year’s road works have been completed under this project.

When implementing the national project, we often have to deal with the fact that representatives of both the state customer and contractors in the regions and municipalities are not competent enough. Faults in planning, delays in auctioning and inability to plan ahead put serious restrictions on the work for our citizens. Right now the road industry is suffering from not having enough qualified engineers. Considering the volume of work, this trend will continue to grow.

I would like to ask you to support our proposal on placing the Moscow Automobile and Road Construction State Technical University (MADI) under the supervision of the Ministry of Transport. It would help us to bring new personnel to the road industry.

And the last thing. As part of the implementation of the May Executive Order and your additional instructions, Mr President, we have optimised the stage-by-stage approach and layout of the Europe-Western China route. Mr Medvedev has made all the necessary decisions on this matter. We have started preparing the documents on area planning and soon we will start working on the design and begin the construction itself, in order to finish the most needed and congested sections of this route by 2024.

Vladimir Putin: As for the higher education institutions, it was the Government that at one time came up with the initiative to incorporate all the main universities into the Ministry of Science and Education. If there is an idea now to disincorporate the whole thing and have them transferred back to relevant industries, we can make this decision too. But it should be agreed upon by the Government first.

And what about the roads in our North, from Yakutsk to the east and to the west, to Magadan? How is the Magadan road now?

Yevgeny Ditrikh: The Magadan road is being gradually repaired; there are unpaved sections which we are working on now. The regional road network in the Magadan Region is also being repaired. We are working there together with Governor Sergei Nosov, he had plans related to the repair of unpaved roads. He suggested that they are paved with bituminous concrete, and we are currently looking for additional funding and possibilities to do this.

As for Yakutsk, as I recall, the situation at the moment is rather difficult, because the regional roads in the Republic of Sakha (Yakutia) are quite long. There are some 12,000 kilometres of them that need repairs; this is much more than in all the other regions. We are looking into the possibility to fix the regional network as soon as possible.

But this is not easy; 12,000 kilometres is more than in any other region where road repairs are currently underway.

Vladimir Putin: Ok. Thank you.

It is the middle of November already, and despite the unusually warm weather in the European part of Russia, the flu season is coming or has already come to the country in general. The flu rate has decreased in our country by more than 13 times over the last 13 years. How is the vaccination campaign going this year?

Healthcare Minister Veronika Skvortsova: Thank you very much.

Mr President, colleagues,

Indeed, the lower flu rate we have seen in recent years is a result of the 2.5-times increase in vaccination coverage. The most efficient way to fight the flu is prevention through vaccination.

This year, the WHO published the current vaccine strains a month later than usual, at the end of March, and both influenza A strains have changed compared to the previous year. They are the Brisbane strain, which reminds us of the swine flu of 2009, and H3N2 Kansas. Nevertheless, our Russian manufacturers have developed the vaccines in time, and we have four basic trivalent influenza vaccines, three of which are used for children.

These are high-technology and safe vaccines that develop strong immunity, which was verified this year by studying our population’s community immunity from April to June, and it was discovered that the share of the population immune to influenza is quite high after last year’s vaccination campaign: over 72 percent to influenza A and over 60 percent to influenza B. It means that our Russian vaccines obviously work and help prevent epidemic processes.

In addition, a quadrivalent vaccine was developed this past June. Currently, it is the world’s gold standard and has great export potential, which so far will be used for risk group patients: medical personnel and employees of educational institutions and utility companies.

The government has purchased 62.9 million doses, of which 60.2 million are trivalent and 2.7 million are quadrivalent vaccines, which enables us to vaccinate more than 45 percent of the country’s population and more than 75 percent of the risk group population.

The National Immunobiological Company began supplying the vaccine in August. As of today, all the children’s vaccine and 83.5 percent of the adult vaccine has been provided to 66 regions. The rest will be supplied this week, by November 15, including the first supply of the quadrivalent vaccine.

As of November 8, over 55 million, or over 38 percent of the population, have been vaccinated.

Vladimir Putin: How many, 38?

Veronika Skvortsova: Over 55 million, or more than 38 percent, including 16 million children and 189,000 pregnant women. Also, it has been done as part of the state procurement, but employers are taking an active part in the vaccination campaign. They have vaccinated over 4.3 million people using their own funds.

As a result, today we are in an interepidemic period, when the incidence is many times lower than the epidemic threshold and 98 percent lower than the pre-epidemic baseline. Even if we are speaking about non-influenza respiratory viral infections, such as parainfluenza, adenovirus and rhinovirus, the incidence is also 25–27 lower than the epidemic threshold.

An increase of cases is expected in late December and will be of average intensity. The regions are completely prepared, and the Federal Service for Surveillance in Healthcare, in line with the instructions of the Healthcare Ministry, checked that all the regions had an emergency supply of medicine and individual protective items for two weeks. All intensive care units at isolation hospitals have been inspected and 100,000 isolation beds mobilised.

It must be noted that for over two years the number of extracorporeal membrane oxygenation machines to treat the most serious virus pneumonias has more than doubled. This is why we are ready in general; all the necessary checks to monitor the seasonal situation have been carried out; we have it under control.

Vladimir Putin: Ms Skvortsova, you have listed the risk groups: healthcare workers, education, and housing and utilities.

Veronika Skvortsova: Yes.

Vladimir Putin: Do the Government members fall in the risk group?

Veronika Skvortsova: That’s up to you, Mr President. (Laughter.)

Vladimir Putin: I think this is also a risk group, because we work with people, and work quite intensely.

Has the Prime Minister been vaccinated? No, he hasn’t. And the Chief of Staff of the Presidential Executive Office? How many Government members have been vaccinated? One, two, three. Three. Four, as I also have.

If you fall ill, it’s a self-kill. (Laughter.) What do you think? If you could have prevented it and you didn’t.

I am asking you to think about this. Thank you.

As for our main topic. The localisation of production of machinery and equipment. In other words, the production in Russia, at our enterprises, of high-tech goods necessary for the implementation of national projects. As you know, we plan to make large-scale purchases of medical, construction, computer and telecommunications equipment, the road equipment the Minister talked about, and other equipment totalling over 6 trillion rubles.

Recently, Mr Medvedev and I discussed all these issues together, face to face, and indeed, the state has never before allocated funds for these purposes in such a large-scale, targeted and comprehensive way.

We plan to purchase over 4,700 items of machinery and equipment. Once again I want to repeat: It is important that we rely primarily on domestic producers for these purchases, so that the huge budget funds allocated for these purposes work precisely within the country, for the development of the Russian economy, and provide an additional opportunity to create high-quality, skilled and well-paid jobs in our cities, in the regions as a whole, for the quality growth of high-tech sectors, for the development of business and, very importantly, for the diversification of the defence industry.

We have discussed this topic many times. As you know, overall defence and security allocations have decreased. This is not due to the fact that we are neglecting these issues, but to the fact that we have done the bulk of this work, planned and related to the need to step up our country’s security, the need to replace military equipment and military vehicles.

Production facilities were built, and highly qualified employees are working there. They should move forward, not manufacture pots, as it was in the late 1990s or early 2000s, but produce high-tech equipment and machinery. Therefore, we should order what they can produce and finance this work smoothly.

I am asking you to submit clear, understandable and consistent proposals on expanding defence enterprises’ participation in the implementation of national projects, and also to inform me what legal and organisational decisions are necessary to this end. In general, while the contract campaign is on, we need to take urgent measures to increase the share of Russian-made products in the total volume of orders.

And, of course, the purchased Russian-made equipment must be competitive; this is natural. We do not need to repeat what happened in the closed Soviet economy. This equipment must meet the customers’ needs and have a reliable system of after-sales and guarantee support.

I would like to reiterate that we need to ensure targeted spending for purchasing equipment and instruments. We need to reach absolute transparency in this area, I would like to emphasise this once again.

The flow of funds must be absolutely clear at all levels of governance and for all kinds of budget spending.

I repeatedly said the same in relation to our other large projects, for instance, the Vostochny Space Launch Centre. It has been said a hundred times: “Work in a transparent way; this is a huge, nation-wide project that involves huge funds.” But no, they steal hundreds of millions. Hundreds of millions. Several dozens of criminal cases have been opened, investigations conducted, and people are in jail. But it still has been impossible to bring that place to order.

I hope that when we speak about diversification of production, about working in the defence industry with these funds, this money, everything will be organised there in a proper way. I will ask the Prosecutor’s Office, the investigative bodies, as well as the Presidential Control Directorate to monitor the situation closely. I am asking you to work these issues out and maintain a working, efficient control over the procurements.

Let us discuss this.

<…>

November 11, 2019, The Kremlin, Moscow