Good afternoon!

I think that the saying "paying taxes is like giving flowers to a loved one" sounds nicer than "pay your taxes and sleep tight." The former will clearly evoke much more positive emotions among Russian taxpayers. I hope, and this is why we all gathered here today, the Tax Service will do its best to make tax payments a less inconvenient and unpleasant experience.

A great deal of our efforts within the programme for financially educating Russian citizens focuses on teaching people how to do their tax returns and pay taxes correctly. A poll conducted as part of this programme revealed that people are more afraid of the taxman than a visit to a dentist. We should turn this around. People aren't aware there are tax returns and rules to be complied with. If they fail to pay their taxes, they might be stopped by the border control and have their trip ruined. Our goal is to provide high-quality, convenient and comfortable services for Russian taxpayers, so they can fulfil their civic duties.

I'd like to support Andrei Makarov, who brought up the issue of teaming up with the ministries and departments that administer and provide information about tax computation and payment. We have 15 such departments, and the information is not always valid. We have heard such vivid examples today.

For many years now, we've been saying that better information, database availability, sharing databases and timely re-checking data would bring better fiscal results and let taxpayers avoid major problems. Let's make this year a year of war on "sloppy" data by which I mean inaccurate data coming from other ministries and departments that impedes our work. Let's make this year a year of war against mounting debt and for more efficient tax collection.

This is what our board meeting is about, Let's use this year to do most of the work to improve the collection of data coming from ministries and departments and improve teamwork. I'd like to thank people from other ministries who have already spoken at today's board meeting. I'd like to see actual measures taken after we're done here today that will result in the better quality of such data. Let's meet again if we need to. Let's meet in the government building and discuss specific proposals about better data collection and administration practices.

We should focus more on administration quality today. The overall idea about supervisory bodies now, especially government ones, is that they break the law themselves, and violate the rights of citizens and taxpayers. I'm talking not only about the Federal Tax Service. This is a serious barrier to business development. The state watchdogs are often used for settling scores or colluding purposes. We hear a lot about it.

Lately, the president spoke in Magnitogorsk about the need to improve the quality of the supervisory agencies and even suggested that vice prime ministers assume personal control over specific supervisory agencies. He even listed them all, and I'll say a few words about it now. He didn't mention the Tax Service, though. First, this is good news.

We have passed the time when the Tax Service was considered the biggest problem for businesses. It has improved its operations and administration, and we hear fewer complaints now. Probably, that is why we didn't make it on the president's list. Still, we are all there -- the head of the Tax Service, Mikhail Mishustin, and I. We do not shun personal responsibility and we are here with you to discuss further steps to improve service in all areas.

We are not on the list. However, everyone knows that we still have unresolved teamwork issues with the Federal Tax Service. Wherever things happen, no matter which region or which inspectorate, Mishustin and Kudrin are responsible for everything. That's the way we should see it. Therefore, I request that you improve performance in all key areas.

Since we are talking about improving the government agencies' work today, let me tell you that the prime minister assigned vice prime ministers to specific supervisory bodies and instructed them to monitor the quality of such supervisory bodies and develop measures to improve their work.

I think you might be interested to know that Vice Prime Minister Sergey Ivanov is in charge of the Russian border checkpoints, postal service, and the airport and railway services. Ivanov is personally responsible for all issues related to airports, tickets, mail and border control.

Vice Prime Minister Igor Sechin is in charge of the technical control and supervision of work in the area of mineral extraction. Geological prospecting and rational subsurface resources managemet are also his responsibility. Sechin now oversees a significant part of the work conducted by the Federal Service for Environmental, Technological and Nuclear Supervision. The service is led by Nikolai Kutyin. These people are responsible for all administration issues arising in any business operating under this department.

Vice Prime Minister Aleksandr Zhukov oversees state sanitary and epidemiological control exercised by the Federal Service for the Oversight of Consumer Protection and Welfare headed by Gennady Onischenko. All business complications arising in this area will be tackled by these two people, and they will be personally responsible for improvements in this area.

Fire safety is next. Fire inspection is overseen by Igor Shuvalov. He is also responsible for issuing visas, work authorisations, and the registration of foreign nationals at their places of residence in Russia. Therefore, we have Sergey Shoigu and Igor Shuvalov responsible for fire inspection and all issues in this area of business. I've also mentioned that Shuvalov oversees the Federal Migration Service. We discussed these measures before the presidential trip to Magnitogorsk. We believe these are the right measures and they should bring results.

I am not on this list because I'm already in charge of the Federal Tax Service. In addition to that, I, as a vice prime minister, also oversee the Federal Service for Financial Markets and other services. No one has relieved me of these responsibilities.

The deputy prime ministers have been instructed to submit reports about the areas of their respective responsibilities. They must take into account interested investors' assessments of the quality of services provided by the state and their compliance with requirements and procedures as they relate to exercising control and supervisory activities. The deadline has been set for Oct. 1, which means that by Oct. 1 the vice prime ministers should report their first results in these areas. Only the Customs Service is missing from the list. However, the government believes that we should assign someone to oversee that, too.

We are discussing this issue with the prime minister as we have issues in this area, as well. We plan to improve the situation drastically across all these areas.

Speaking about the Tax Service, we have survey results and we'll use them in the performance evaluation. There are surveys commissioned by the Tax Service itself to monitor the sentiment of taxpayers with regard to the quality of services and administration. There are independent survey agencies. The instructions issued by the prime minister say that the evaluation should include interested investors' opinions about government service quality. We should conduct such evaluation in the Tax Service, too.

Here are the evaluations provided by the Tax Service of its individual performance indicators. There is an index comprised of points. In 2008, the level of satisfaction with the service's work was 60.7%, in 2009 69.5% and in 2010 73.5%. The level of satisfaction with the professionalism of the Tax Service's employees increased from 69% to 74% in two years.

The indicator of information provided to taxpayers was the weakest two years ago. The level of information was low. Now, with all the available electronic services, the situation has significantly improved by 17 points at a time. The service efficiency stands at 75%. The compliance indicator with the single standard of servicing taxpayers is down. Accordingly, this single standard includes information over the phone, voice information, waiting time and service provision deadlines. These are the most important points in addition to the provision of information. The service standards have somewhat declined over the past 12 months from 74% to 72%. The last factor – the convenience of customer service area equipment – has improved.

Distinctions are made between major taxpayers, legal entities, and sole proprietors, physical persons. There are different evaluations for them all. Small- and medium-sized businesses are less satisfied. They need more attention going their way. There's one more issue I'd like to bring up today. The information is broken down by Russian constituent entities and by territorial directorates. I will not read it out loud here today. However, I'd like to discuss certain territories during the next meeting in the fall.

I'd like to discuss not only the declining indicators or increased debt, although they are also indicative of the work being done, but the administration quality as well. Please make a note of that. I'd like to instruct the Tax Service and other departments to prepare such a report by Oct. 1, including investors' positions and evaluations. Please do it.

I haven't named another vice prime minister in charge of important issues -- Dmitry Kozak. He is in charge of state control and supervision over capital construction, municipal regulations, monitoring investment activity in the sphere of housing and utilities, and monitoring government authorities' activities in the regions to attract private investment to the real economy.

I think these are important measures that should significantly improve the quality of state institutions' work within the next few months. These issues pertain to the quality of the investment climate mentioned by the president in Magnitogorsk and by the prime minister at the joint board meeting of the Finance Ministry and the Economic Development Ministry.

I took note of Andrei Makarov's speech when he talked about VAT refunding in Moscow. The number of VAT refund claims is down 4.5% across Russia this quarter. This surprised me, too. The number of claims fell at a time when the economy is growing. In Moscow, this number contracted by 11.7%. Those who hoped to get the refund earlier don't have this hope anymore. We began this work and we seriously discussed it with the person heading this service. We began doing this work almost one year ago when I recommended Mishustin for this position. We agreed that our primary goal was to eradicate the schemes involving VAT refunds. We have just set out to do this work. There will be a number of regulatory and legislative initiatives that will help cut fraud in this area. This has become a real scourge for us, a commonplace critique of the taxation system and VAT. However, countries that didn't switch to VAT before are doing so now.

Over 120 countries have switched to VAT from other taxes since the mid-1970s. There were two or three countries that went back to sales tax, but then reverted to VAT again. VAT is a neutral and quality tax.

The recent developments in Great Britain that occurred as part of budget consolidation include the VAT going up to 20% from 17.5% beginning Jan. 1. The revenue tax was cut by 2% on April 1 and will be further reduced by 3% within the next two years. In short, Great Britain is cutting its revenue tax and increasing its VAT, as a more neutral and collectable tax for the modern economy. The VAT weathered the crisis with greater stability.

I can imagine the state we would be in if we had dropped it. Revenue tax fell 60% and then rebounded by 45%-50% in a matter of 12 months. Relying on revenue tax would have precluded our fulfilling the government functions in full. There are setbacks involved in the VAT administration, but we will get over them by improving the administration. We understand the tricks used by businesses. These tricks have been scrutinised.

I cannot rule out that there might be certain agreements with the tax services and the latter might turn a blind eye to certain things. Please take a good look at that. We will investigate all suspicious cases. It is clear that certain sanctions will apply. The internal security service and the Federal Tax Service have already begun this work. We have information from entrepreneurs. We have a clear vision of which path to choose. I'm sure we will solve this issue soon. Therefore, I ask you to pay attention.

In conclusion, I'd like to ask all of you to act as a team from the viewpoint of protecting the honour of the state and the Tax Service. We need to ensure the superior quality of our work. Investors see your work as a telltale sign of the government's work. We need the investment. We need to press ahead with modernisation. Oftentimes, you deal with the businessmen directly, without intermediaries.

During a board meeting at the Finance Ministry I said that we expected greater revenues this year. We expect to collect 1,458 billion roubles more than in the previous year, of which 1,138 billion roubles will come from oil and gas revenues and 320 billion from non-oil-and-gas sources.

This increase is due not only to your efforts. Changes in the macroeconomic forecast have a lot to do with it. For example, based on how the macroeconomic indicators have changed, we see the need to boost the fiscal revenue by 1,525 billion roubles. Factors that are related to the macroeconomic indicators will entail a decline in the amount of 76 billion roubles. The improvements in tax collection are not included here. For the purpose of this forecast, we have used the numbers that we had included in the budget estimation for all types of taxes. However, you can throw in your own details to this picture with regard to collectability, including the VAT and other taxes. Please keep up the good work.

If we go further into the details of these extra revenues and try to identify their sources, we'll see that they come in two varieties -- oil and gas revenues and non-oil-and-gas revenues. There are factors significantly affecting tax collection. I'll name a few important ones. Given the current global oil prices, we will receive 1,736 billion roubles. However, we should realise that we will also lose due to certain factors. For example, we are expecting the rouble to get stronger vs. the dollar by two roubles. That alone will make us lose 408 billion roubles.

On the one hand, we win, and on the other hand, we lose. Exports will grow. We will make some money here, about 23 billion roubles. Revenues will drop by 293 billion roubles on export decreases. Imports will increase. They are already growing at a greater rate than expected. We will gain an extra 166 billion roubles more for imports. The GDP will grow beyond our expectations by 190 billion roubles.

There are factors that will actually decrease our revenue compared to the numbers in the estimated budget. We have conducted an early cancellation, already after the budget was submitted to the Duma, of the customs duties on oil exported to Belarus. We are down 160 billion here as compared with the originally planned number. We have also extended the grace period for Vancor until May.

Originally, it was planned until Jan. 1 and then extended to May 1. We are 14 billion down right there. However, we have improved VAT collectability and are now 37 billion in the black. Next, we are up 68 billion after we check all the other administrators across other ministries. We are closely following all factors conductive to better tax collection in areas showing increases in gross indicators.

The macroeconomic policies have worked fine, and we should credit the Federal Tax Service for that. Please don't forget about this. We will monitor the issue. Now, a few words about the measures to improve the collectability of tax arrears. The Finance Ministry works closely with the Tax Service, and we make joint amendments to regulatory and legislative acts.

Last summer, we adopted a federal law with the goal of establishing legislative standards covering work with arrears. This involves the procedure governing the provision of tax deferment, creating new rules for issuing investment tax credits, and writing off taxes in arrears and outstanding penalties. Writing off bad debts is serious business and we should improve the administration here. We should write off debt provided there are good reasons to do so. Please note that sometimes debt is written off because the tax inspectorates were late with their work. We will deal with this.

I will not dwell on the administration details. My colleagues from the ministry will likely give you more detailed information. I'd like to thank the Tax Service employees for their efforts in improving administration and effectiveness and wish them success. I hope we will be able to take the Tax Service to a new quality level and this will not be an issue for our entrepreneurs and businesses. Thank you!