Russia needs an economic agenda based on common sense, a smart and balanced program of developing the coutry's economy and improving the well-being of people. This is the kind of program Alexey Navalny suggests. Its main goals are:
1. To pay decent salaries and pensions.
It is impossible to achieve economic growth with dog-poor population. Over a half of working Russians have earn less than 25 thousand rubles, over 80% — less than 50 thousand. The average pension is 13 thousand. For this money, you can only afford the most basic food and clothes. Most Russians are practically trying to survive. Our program includes increasing the minimum wage to 25 thousand rubles and creating a well-functioning pension system with decent pensions. This will cause a restart of economic growth and create a large number of well-paid workspaces.
2. To restart economic growth.
Putin's government is unable to achieve this — if you look at the three-year budget for 2018 –2020, you'll see that even the best scenarios there include only a microscopic growth of real disposable income, just 1-2% annually. Our program of restarting economic growth, freeing the entrepreneur initiative, decreasing taxes and demonopolizing the economy will help achieve an actually rapid growth.
The main goal of the economic policy is the man
For too long has the Russian economic policy been enriching the rulers and the monopolies close to them by cutting corners on what's most important — the people. It's time for us to put an end to this.
Under Alexey Navalny, the priority of budget policy will be financing healthcare and education. State spending on these spheres will double, and in terms of their share in GDP, Russia will catch up to the developed countries. Our separate plan of budget maneuver explains where we'll get the money for this: we will cut the unnecessary expenses on supporting the excessive officialdom and security officials, stop funding the ineffective large-scale projects aimed at siphoning off money (economic projects must be funded by investors, not taxpayers).
The minimum wage of 25 thousand rubles will allow tens of millions of Russians to escape poverty. We will move towards this level of minimum wage gradually, over the course of three-four years. Entrepreneurs won't need to worry about the consequences of this initiative, because it will be accompanied by a significant reduction of the tax burden on labor expense and abolishment of small business taxes, as well as other administrative, regulatory and corruption burden. At the same time, the increase of salaries will have a positive influence on the demand for their products.
We will provide decent pensions for the elderlies. For that, the Pension Fund as a redistribution mechanism will be abolished. In its place, the world's largest investment fund with equity capital will be created, similar to the Norwegian Global Pension Fund. For that, funds of the National Wealth Fund, government-owned stocks of publicly traded companies and dividends paid by them, as well as incomes from privatization and management of state property, including mineral state companies, will be transferred to it. Today, Gazprom and Rosneft pay 2% and 1% of the fees to the non-budget social funds respectively, and the remaining 97% are paid by other Russian entrepreneurs. Under Navalny, current and future pensionaries will become owners of their own share in the capital of the Pension Fund, instead of waiting for the government to throw them a bone like they do now.
We will get the pension system under control. Russia will voluntarily give up its status of the country with the most employees of the pension fund and the highest costs of their maintenance — the fund's work can be quickly automated. For example, the expenses on increasing the old-age pensions from 13 to 20 thousand rubles are comparable to the current budget of the Pension Fund. Furthermore, the workload of the Pension Fund will be gradually reduced as a result of the increase of healthcare spending, improvement of ecological situation, decrease of criminality and deaths on the roads and refusal to participate in military conflicts abroad.
Our program includes a wide range of measures aimed at relieving the entrepreneurs from the pressures of bureaucracy, security officials and monopolies. We will demonopolize the economy and lower the monopolistic prices. We will decrease the number of workers in the controlling organs and abolish some of them. We will forbid business checkups — the control of operations will be done in electronic format, and on-site checkups will only be done upon court decisions in case of serious suspicions of violations. We will abolish taxation management and completely switch to accounting reports in accordance with the international standards. We will forbid to open a criminal case while the same case is already being heard as part of a commercial dispute, as well as to put entrepreneurs under arrest for economic crimes before judgement.
The judicial system created by us, fully independent from the executive power, will protect private property from illegal takeovers and high-handedness of state organs.
What we have now in Russia is some twisted kind of capitalism, where the government controls the majority of the economy and pushes businessmen around. Such a system hinders the development of the country.— Alexey Navalny
We will abolish small business taxes — today, they only give less than 0.5% of GDP to the consolidated budget. At the same time, a huge number of bureaucrats is required to administrate them. It is easier to simply offer small business owners to annually pay a patent fee to the budget and completely free them from further tax control. Small business is required for creating workspaces and ensuring self-employment of the population, not for fiscal means. (This will not result in any artificial tax avoidance, because we will rebuild the tax system in accordance witht he international standards implemented in developed countries — in such conditions, it will be impossible to portray a large enterprise or a retail network as a «chain of private entrepreneurs»)
We will decrease payroll taxes (insurance fees) from 30% to 15%, which will remove the barriers for increasing salaries in the private sector of the economy. This will be done through modifying the mechanism of Pension Fund formation as described above.
We will make peace with the civilized world, stop aggression towards Ukraine and thus achieve the removal of sanctions, which prevent our entrepreneurs from trading with the outside world and getting cheap loans on global financial markets.
Economy without corruption, monopolies and bureaucratic restraints
Putin's system functions simply: it constantly increases the fees paid by honest entrepreneurs and common citizens to the benefit of a small group of officials, their relatives and friends, as well as monopolies connected to them. We view the economic system completely differently: a compact state that provides the society with important social and infrastructural services (medicine, education, transport, pension system) and doesn't intervene in the country's economic life, while large state monopolies don't exist at all.
Our country's key problem is corruption. Trillions of rubles that could have been spent on development or financing of social programs are simply getting stolen or spent on unnecessary and non-demanded projects created to further enrich the people close to the government. At the Anti-Corruption Foundation, we've learned to effectively monitor and identify corrupt state procurements. We can use the experience we've gathered and the world's best practices on a nationwide scale.
The number of government and security officials will be significantly reduced, along with their powers. As noted above, they will no longer be able to intervene into business's activities, including power-based methods.
We will conduct a thorough demonopolization of strategic sectors of the economy and develop competition within these sectors, which will reduce not only the costs of services of energetic, transport and utility monopolies and state procurements, but also the loan interest rates. Current overly high rates in addition to the banks' record incomes while the economy is «down on its back» is the direct result of the dominance of a narrow group of state banks on the bank market (today, they control two thirds of the bank system's assets). To fix this situation, we will dramatically change the treatment of the bank sector — instead of a privileged sphere of the economy that gets all the prime cuts and twists the arms of honest entrepreneurs, the banks will become a regular unit of infrastructure, a sector with high competition, where the clients will be fought for by offering more attractive terms of service with a sensible markup.
We will abolish non-tax fees like «Platon», disposal fees, total renovation fees, etc. All these fees serve only one purpose — enriching the officialdom and people close to it. President Navalny will abolish them all, and everyone will only pay the fees stipulated in the Tax Code.
For common citizens, the demonopolization measures we suggest will have a simple effect easily noticed in everyday life: the constant growth of utility fees will finally stop. Utility monopolies will no longer have the right to increase the fees without a public audit of their expenses. People will very quickly feel the effect of our policies on their wallets — in a positive way.
Apart from that, the housing prices will decrease. Today, the officials massively hold on to the land for fellow developers, who construct mostly elite housing. The country could have been overbuilt with cheap housing long ago, but this doesn't happen because of the monopolization of control over lands by officials, as well as monopolization of the construction market by companies connected to the government. We will unblock these markets remove the officals' interests from there, ensure transparency of distribution of land and construction contracts. As a result, Russians will finally get affordable housing.
Developing high-tech economy
We've been hearing talks about developing high-tech economy for many years now. We'll move on from discussing this problem to solving it.
- By significantly lowering administrative barriers and removing the pressure from government and security officials, we will free the way for creating high-tech production plants in Russia. Lowering the payroll tax will play an important part here — in high-tech branches and knowledge economy, this expense item is higher than in other branches.
- We will stop the brain drain by creating a comfortable living environment oriented on the man and not on protection of interests of bureaucrats and monopolies. Talented people working in high-tech branches will stop leaving the country.
- We will support the expansion of our exporters of high-tech products onto foreign markets in every possible way — lawyers will work on removing the barriers against Russian goods and services in other countries, routine export procedures will be abolished, a national credit-export agency will be created to support the purchase of Russian goods and services by foreign companies
We want Russia to export planes, ships and IT products instead of raw pumped out of the ground. For this, the government must stop «hunting» the business for the benefit of government and security officials and become its ally and assistant across the globe.
Ease of travel
Russian roads are horrible, and flights to most cities go through Moscow and cost insane amounts of money. This is also the result of monopolism and excessive bureaucracy. For instance, annual consolidated budget expenditures on road facilities. This would be enough to annually build 13 thousand kilometers of quality federal highways (assuming the average cost of one kilometer a new highway is 100 million rubles). But in reality, only 200-300 kilometers are built every year. The main part of the road facilities budget is spent on repairing roads, often the roads that were just built. The explanation to this is rather obvious: the allocated funds are simply getting stolen upon agreement between officials and companies close to them, so the more repairs there are, the better.
Under president Navalny, there will be none of this. We will put the distribution of funds on road construction under strict public control and make the tender procedure as competitive and open as possible, We will create mechanisms that will stimulate companies to build quality roads (for example, an automatic reward in case the road maintains its quality after the end of the warranty period, which is usually 4-5 years).
We need to put some order into the aviation market. Like the real estate market, it is a low-investment market: it's not too hard to purchase a couple of small planes for short and medium range flights, many entrepreneurs are able to do this. What stops them is again the monopoly: full control of regional officials and companies connected to them over airports, federal officials appeasing the monopolization of the aviation market (Aeroflot's share on the domestic passenger transportation market has reached 50% after its purchase of Transaero). We will conduct the «open sky» policy, allow all transport operators unlimited access to all flights, stimulate commerce. The government will also invest significant funds into modernization of airports: this will be the second biggest priority in financing of the transport system, after road construction.
As a result of these measures, the country's transport connectivity will drastically increase, transportation costs will decrease, and all this will further stimulate economic activity. Apart from that, the number of deaths on roads, which now reaches the levels of African countries, will decrease, because it is strongly connected to the low quality of roads (one of the main causes of deaths are two-lane highways, where drivers constantly need to overtake trucks).
We will create 500 thousand high-wage workplaces in the professional army. The draft will be abolished, since conscripts cannot provide the required combat effectiveness of the troops. Despite what the generals say, Russia can definitely afford an al-volunteer military: 500 thousand volunteers with an average monthly salary of 200 thousand rubles (our goal) will cost the budget 1.2 trillion rubles a year. Current military budget is 3 trillion, so an all-volunteer army would fit into a reasonable budget. Under Putin, most military expenditures are caused by monopolistic defense industry that drives up its prices for everything. We will return competition to the defense industry and make companies compete for government contracts and offer quality arms and military equipment for affordable prices.
Transfer of authority and taxes to the regional level
Our budget reform program involves increasing the part of taxes and fees to be left to the regions. We're talking about a part of VAT, MET and excise on tobacco and strong alcohol. Today, the money is practically being sent back and forth: first they take it from the regions, and then they send it back to these regions in form of subsidies. This is done in order to make the regions politically dependent. We are strongly against this. A fair distribution of tax incomes between the center and the regions should reach 50:50 within a few years (in recent years, it was around 70:30 in favor of the federal center). This will not result in an increase of the federal budget, but it will definitely provide a significant push for the development of the regions.
Russia doesn't need weak regions that lack initiative and local self-government that lacks resources. It needs strong regions that decide their development strategy for themselves and have motivation to attract investors and develop their economy (today, this is pointless, because all the additional incomes go to Moscow anyway). It needs active local self-government that would be able to solve all the current issues of Russian citizens.
Another important issue is the transfer of tax incomes from regions to municipalities. As a result of Putin's activities, many municipal entities have lost both real authority and income base. We will change that: a fair share of personal income tax revenue (which will increase as result of our salary increase policy), as well as property tax revenue, will be transferred to municipalities. A strong and financially independent local self-government is an important foundation for the free society oriented toward development.
Summary: economy for the man, not a narrow group of people close to the government
'The country has enough resources to ensure a rapid growth of economy and welfare of its citizens. It's just that these resources are being embezzled, and the resulting breaches in the country's economy are being filled through the increase of fees paid by the population.
We will put an end to this. The government will start fulfilling its direct functions —provide people with normal education, healthcare, pensions, transport infrastructure. The governmental machine will be reduced in size and put under strict public control. Entrepreneurs will have their hands untied for investing and raising salaries. The main changes will be made in the first one or two years — entrepreneurs and citizens will soon feel the change of economic atmosphere for themselves. Russia will rapidly move down the path to become a developed and rich country.