Transcript of the meeting:

Vladimir Putin: Good afternoon, colleagues and friends. I remind you that on March 22 we had a general discussion of the priorities that I set forth in the articles I wrote during the election campaign. As you know, when the election campaign ends, the real work begins.

The topic of our meeting today, of our discussion, is the quality of the state. Primarily we will discuss the creation of a competitive system of governance that is geared toward people's concerns. Modern media makes this possible, and it would be wrong of us to fail to take advantage of this opportunity.

Without a doubt, there are some areas where we should work to improve the quality of governance – this is obvious. We should improve both the culture of production, the administrative culture, and civil culture as a whole. Of course, civil society must become a real co-author of all transformations sought by the authorities. We have begun to introduce in practice such forms of work, and some draft laws (I have spoken about this, including in public) have undergone public expert review, which was thorough and useful. For example, the law on medical practice, on medicine in Russia. As you know, it led to many arguments but ultimately it became a compromise document that takes into account the interests of the professional groups involved and all citizens.

We need a modern model of governance based on state-of-the-art information technologies including crowdsourcing – a preliminary poll with a consecutive reaction to the results of the decisions that are being introduced.

As I said, we have made a number of important steps, including a portal launched on March 1 to get public opinion on the most important governmental draft laws. Citizens have the option to make their points and submit proposals. Essentially, that is the feedback mechanism that I mentioned: a project is evaluated not only by departments and not only by the people who had developed the draft law or by-law, but by the people who will live and work under these laws.

Today we also invited to our meeting some people who are not at all involved in the activity of the bureaucracy. They are Alexei Arbuzov, a member of the Public Chamber of the Republic of Khakassia, Georgy Belozyorov, and Feniya Khakimova, general director of Avtovokzaly company from the Samara Region. They have actively participated in discussions of a number of documents. I want to thank you, first, for what you've done and, second, for participating in our joint work today.

In general, I think that not only the government but all ministries and departments must create conditions for public review not only on the basis of documents and existing instruments but by extending these instruments and possibilities. I ask the Ministry of Economic Development and the Ministry of Justice to formulate the principles of this work and requirements for organising such work without delay.

The procedure for evaluating regulatory impact has yielded positive results. Here we are working rather closely with representatives of the business community, and some of our colleagues are present here. Moreover, you are in fact co-authors of these ideas, these proposals that are being implemented, and I hope very much that this practice will grow and will be used in all other areas of life and not only for building relations between businesses and the state.

We are creating a functioning mechanism for harnessing the initiatives of Russian society. The State Duma should discuss citizen proposals that get 100,000 authorised signatures on the internet, as I've said repeatedly, and a concept of this project should be prepared by the autumn. Meanwhile we must resolve serious technological issues too, such as setting up a website for registering and discussing initiatives, as well as the mechanism for authorising citizens supporting a proposal or submitting a proposal or an initiative.

And I'd like to touch upon one more issue in this meeting – strengthening the revenue base of our municipalities. Recently we have returned to this issue again and again. It is an extremely important level of government, and its efficient work largely determines the wellbeing of millions of our citizens, practically all our citizens. We must set the parameters and sources of additional revenue, municipal budget receipts, and we also need to develop clear and understandable criteria for extending inter-budgetary transfers from regions to municipalities, and these criteria should not depend on the whim of superiors.

This problem is raised and discussed at almost every meeting with city leaders. Let me reiterate: the issue is not simply about the use of budget funds. As you know, a solid revenue base for local budgets provides incentives for regional development and creates a strong foundation for greater independence, authority and the importance of municipal authorities.

Let’s begin with the first issue. I now give the floor to Mr Fomichyov (Oleg Fomichyov, Deputy Minister of Economic Development). Please go ahead.

Oleg Fomichyov: Thank you. Mr Putin, colleagues, you have handouts on the presentation called “Creating Participation Mechanisms.” I will go over it briefly. The handouts include highlights of this presentation and graphic materials explaining the points that I’m going to talk about.

As a follow-up to the article Democracy and Quality of Public Administration, the Ministry of Economic Development has outlined some approaches to establishing new participation mechanisms. You can see three key approaches on Slide 1. The first one is about promoting a decision. This is what you, Mr Putin, said when you spoke about the collection of 100,000 signatures and the need to consider corresponding initiatives. The second one has to do with broad-based discussions on the corresponding draft laws. And the third is about the regulatory impact assessment. I will briefly discuss openness and the public assessment of government work, as well as the support of individuals and corporations in their administrative disputes with the government.

I would like to begin with public initiative. Slide 3 shows an overview of foreign experience. We are not breaking any new ground here, since the European Union already has similar processes. The British project called “Electronic Petitions” works fine and allows any British citizen to file an electronic petition through a website. Once the number of petitions reaches 100,000, the given initiative must be considered by the parliament. It's a bit different in Great Britain, because their members of parliament are also members of the government, so in this sense such an initiative is considered by the government and the parliament at the same time. The European public initiative process involves more red tape, and the European Commission is not required to look into these kinds of initiatives. However, there is a voluntary flow of proposals coming from the EU citizens, and the EC may either accept them for consideration or not. We propose a Russian Public Initiative system. To a certain extent, it is different from the system we have now. We do have a number of mechanisms that can be used to discuss draft laws or other regulations and legal concepts. There are many of them and they can be sorted by industry and region and so on. We suggest building a specialised, I would even say a lean, strictly functional website that would do just two things: register initiatives and allow a vote on them. All other discussions can be conducted on the existing forums, but voting should take place on this website. The authentication system would be able to confirm that voters are Russian citizens. Such an authentication and identification system has been developed by the Ministry of Communications and Mass Media, and we suggest using it on this website that will provide public services.

Slide 5 shows how this public initiative process stacks up against currently available tools. The key difference is that these initiatives will, as a matter of fact, be binding. The one that we have now presents voluntary initiatives, whereby any legislative agent can take any proposal and submit it to the State Duma without any guarantees that it will be granted serious consideration.

The proposed procedure is shown on Slide 6. It works as follows: an individual posts his or her initiative on the website, which… Let me point out specifically that this initiative doesn’t have to be submitted in the form of a draft federal law, because we can hardly expect the general public to present a legally accurate document. In addition, a legal text would invariably attract more criticism than simply suggesting an idea. Next, the suggestion will be checked for consistency with the Constitution to filter out obvious out-of-line proposals. After that, the proposal will be put to a vote, and if it gets 100,000 votes or more during a year, then a binding, for the government, mechanism will be activated – I will elaborate on that in a minute – with an eye toward submitting it for consideration by the Duma. If it fails to gather 100,000 votes, then the proposal will be removed from the website after a year.

What should the government do? We have already discussed several options out of session and decided that these proposals could be sent directly to the State Duma. However, since we are talking about mere ideas, there must be someone in the Duma… First, we cannot impose this work on anyone and, secondly, someone should take upon himself the task of drafting federal laws etc. Therefore, we propose that in cases where an idea garners 100,000 votes, the government should be required to work on it in an open manner… If the government doesn’t support it, then it should publicly explain the reasons. If a proposal gets the support of the government, then the initiative should be either sent to the legislative drafting commission or directly to the government.

Vladimir Putin: I have a question right away. Look, if there’s an initiative that is destined to become a law – and, as we know, laws regulate social relations – we can assume that a situation may arise where these initiatives will affect the interests of other groups of people. I think we should find a way and a method for the government to take into account the interests of divergent groups as well, rather than always pitting the government against the originators of the initiatives. Most certainly, there will be other opinions, and the government should take them all into account. All viewpoints should be considered in preparation of such initiatives before they are submitted for consideration by the Duma.

Oleg Fomichyov: This is exactly what we are proposing to do: have the government discuss an initiative first, study it thoroughly and include opinions from other concerned groups.

Vladimir Putin: How do you include other people’s opinions? They also need to have the capability to make their opinion known on the website.

Oleg Fomichyov: Yes, of course.

Vladimir Putin: An initiative must be supported by 100,000 votes, but another 5 million people may be against it. The government should hear all positions and then take the final decision together with the State Duma deputies.

Oleg Fomichyov: There are two alternative solutions here. The first one is when we say that any initiative supported by 100,000 votes deserves consideration by the government, even if it’s clear from day-one that the initiative is not quite legitimate. The government will need to release an official comment stating the reasons for refusal, and the issue will be closed. The other alternative provides for voting in favour of, or voting against, an initiative. Then, the initiative will be submitted for consideration by the government if 100,000 more people voted for the initiative. However, we believe that this is a less transparent approach because in that case any initiative can be pulled through using voting procedures …

Vladimir Putin: That’s a good way to water down an initiative.  That’s not good even if we don’t need it. However, we should allow people to vote for and against, because this is a way to include all opinions.

Oleg Fomichyov: In order words, people will be able to vote for and against, but only the votes for would be taken into consideration, is that right?

Vladimir Putin: If an initiative gets 100,000 votes then the government should consider it with due account taken of the opposite viewpoints.

Oleg Fomichyov: Good, that’s right. If, based on a report by the federal agency, the government or the legislative commission decide to go ahead with the development of a draft law, then the government should draft a high-quality draft law and submit it to the parliament in accordance with the established procedure. To avoid a situation where the originator of a proposal is unable to recognise his own idea in the final draft, the entire legislative process should be made public, and all correspondence between the authorities should be made available so as to provide as much transparency as possible. As a matter of fact, I just gave you a brief description of the work involved in considering these initiatives.

Igor Shchegolev: Aren’t we making things overly complicated? If an idea isn’t supported by the parliament, and it took several months or even a year to prepare the draft, we will thus create a huge time lag and people will be dissatisfied. For example, let’s assume that an idea gets the support of 100,000 people, but then our bureaucracy comes into play. Ultimately, the parliament will dismiss the idea. Perhaps, we should first ask our deputies to provide their assessment of the idea and let us know upfront if it’s worth bothering with the draft law?

Vladimir Putin: This can be done in parallel, but still such initiatives should be considered by government experts. There may be initiatives that involve major federal spending, so we would need to make all the appropriate calculations.

Igor Shchegolev: Of course.

Vladimir Putin: There are many good ideas, but few of them can be easily implemented. Actual implementation is the result of the painstaking work of experts. When we work directly with the parliament on government initiatives, we always have a zero reading. We can discuss these initiatives at the same time with the deputies. However, government experts should be involved from the start.

Igor Shchegolev: I fully agree with this, and I believe that this is the way to go. I just don’t want us to be fixated on bringing a ready draft to the parliament. There may be ideas that will require the drafting of a major federal law but that is comprised by many elements… Normally, such laws take a lot of time to prepare.

Vladimir Putin: It might work like that: first, an initiative is supported by 100,000 people and then by MPs; after that, it is taken to the government level, and experts decide that it will require so much money that we won’t be able to afford it in 50 years. And they will say: “We're great guys, okay, everyone is for it, but the government is against it.

Igor Shchegolev: No, everything is right.

Vladimir Putin: What is right?

Igor Shchegolev: There is an idea, government experts assess it, and they say “yes, it is feasible” or “no, this is not feasible.” They approach parliament and say that there is an idea that we believe can be put into practice and ask them what they think about it.

Vladimir Putin: Unless it has been thought through by the government what is the point of discussing it in parliament? I don’t quite understand. You are in communications…

Igor Shchegolev: Yes.

Vladimir Putin: It's possible to invent all sorts of things. And everyone will support it. But then we come to your experts and you will say “this is impossible.”

Igor Shchegolev: No, I am looking at a situation where we have decided, for example, that it can be done.

Vladimir Putin: How have we decided? You first need government experts to work on it.

Igor Shchegolev: Okay, suppose the experts have examined the idea. Deputies come to me, to take your example, and say: all right, we need a new law on communications or some kind of information code. And they say we have this and that. And we agree to all this. And then it takes two years to write the law on communications. It never takes less time for our laws. We have been trying to push through the law on postal communications for two years without success.

Vladimir Putin: It depends on the kind of initiative and the kind of law. Some laws can be implemented quickly but some require painstaking work. I don’t quite see your point, do you believe that things will be done faster in the State Duma?

Igor Shchegolev: I think that if we submit a finished draft law every time, even after it has been examined by the government experts… I am talking about the formal aspect.

Vladimir Putin: Who will be drafting it?

Igor Shchegolev: We may break it up into stages. We conduct an expert examination, the Duma approves it and then we submit a final draft.

Vladimir Putin: Igor, who will prepare the draft?

Igor Shchegolev: Let the government prepare it after the idea has been backed by the MPs.

Vladimir Putin: What is the difference whether or not it is backed if it will not be implemented for a period of two years? I don’t see the idea.

Dmitry Kostennikov (State Secretary, Deputy Justice Minister): Pardon me, may?

Vladimir Putin: Go ahead.

Dmitry Kostennikov: As I understand it, the proposal would have parliament, as you said, discuss the zero reading of the draft law, and that's all.

Vladimir Putin: We are all for it.

Alexander Shokhin (President of the Russian Union of Industrialists and Entrepreneurs): The first reading.  

Dmitry Kostennikov: That's the gist of the proposal.

Vladimir Putin:  No. The first reading is something quite different.

Igor Shchegolev: It is no longer a concept.

Remark: But a draft law.

Vladimir Putin: It is no longer just a concept.

Remark: Indeed, it hardly makes sense because laws must be submitted in a finalised form.

Vladimir Putin: Yes, please.  

Anton Vaino: I think that the lawmaking commission is the right place for the concept to be discussed, and for a decision to be made as to whether the idea is worth pursuing before the stage of in-depth examination and certainly before it is submitted to the State Duma. The commission has representatives of the Duma, of federal executive bodies and of the business community.   

Vladimir Putin: That does not rule out the possibility that the idea, if it appears to be attractive and practicable at the first stage… may go through something like a zero reading at the Duma, why not? Yes, Alexander (addressing Alexander Shokhin), please. 

Alexander Shokhin: Actually, among, I think, 780 subjects that have the right to initiate legislation, the government is only one such subject, and the government's responsibility is great. The procedure of deciding to submit a draft law to the Duma on behalf of the government is fairly complicated, unlike with many other entities that have the right to initiate legislation when any deputy or senator or regional legislature, and so on, can do it. So it seems to me that we are imposing an additional heavy burden on the government, the duty of transforming ideas into legislative initiatives. Because any reading, even a zero reading, is not the discussion of an initiative, it is the discussion of a draft law that is prepared, for all intents and purposes, for the first reading. This is what the lawmaker calls the concept of the law. I think that in principle it would make more sense to agree with the State Duma (and I agree with Igor Shchegolev here), considering that United Russia has the majority in the State Duma. Perhaps by passing a brief special law on public legislative initiatives, the Duma and the corresponding Duma portal where these initiatives are registered could be used and could be brought to the government for its opinion and assessment of the proposed initiatives’ impact on regulation. Then the lawmaking commission may contribute and other mechanisms that already exist may be brought in. It may turn out to be a faster procedure than, say, having the agencies consider initiatives for a year, because an initiative may be backed. We have many ideas that have been proposed, which seem to be acceptable based on their titles, but when the text of the law becomes available, it seems better not to have it at all. It happens quite often for business. In general any idea can be backed, but once it is translated into a draft legislative act it may turn out to be the exact opposite of what it was thought to be. So I think in principle it makes sense not only for the ideas, but for the draft law to be registered, and that requires experts, the involvement of non-governmental organisations, consumer associations, business associations, civil society institutions and so on. In this case we mobilise all the structures of civil society for these initiatives and do not simply let the initiative of this or that individual to be assessed through voting. So I would think that the main burden should be on the State Duma and that the government should operate in a regulatory impact assessment mode, in the mode of conclusions, feasibility studies, etc. But for that, the initiatives that gather 100,000 signatures need to be initiatives presented in the form of a draft law. 

Vladimir Putin: We must think about it. Imagine how many legislative initiatives will be churned out. They may simply… parliament might inundate the government with such initiatives… and then a tug-of-war will begin: the deputies will say that they back grassroots initiatives while the evil government does not want to implement them. I think it should be a joint effort from the beginning, a common effort that does not impede things but on the contrary helps them along and helps to implement the more reasonable of the proposals that are generated in this way, and I am sure that there will be a good many. Anyway, there should be no competition here, you see? The Duma is a political body, it is a law-making body but it is highly political. The government is after all an executive body and it must proceed based on the opinions of the experts whose services it enlists and it must be guided by the interests of society as a whole and not of individual groups, even if these groups initiate sound, useful and interesting ideas.

I don’t think the commission for legislative initiatives is a bad platform. It has representatives of the State Duma, and we could bring in business representatives and whoever else we like, and discuss everything together, taking into account the whole spectrum of opinions. Yes, please. 

Mikhail Barshchevsky (Plenipotentiary Representative of the Government of the Russian Federation to the Constitutional Court, the Supreme Court and the Supreme Commercial Court): Allow me to remind you that the State Duma is not only a lawmaking body, but also a representative body of power. I think it is more in the spirit of the Constitution for a grassroots initiative to be taken up and elaborated by the State Duma bodies and by the deputies of the State Duma. And I would like to warn you of a danger: State Duma deputies will monitor voting on the Internet and as soon as the number reaches 95,000 there is nothing to prevent a State Duma deputy who wants to gain publicity from introducing that draft law if we exclude them from the process, as it were. That is number one. And if we leave that process to them, this deputy will have no opportunity to engage in any publicity stunts because it will be considered by the State Duma anyway.

As for the commission for legislative activities, I have been a member for 11 years and I have a clear idea of how this will happen and how these ideas will be discussed there. I am a lawyer, a stickler for detail, I can discuss texts because the ideas are good, but as you know, the devil is in the details. As soon as they get down to the text they find that it is impossible to set down. It's not only about money, not only about the budget, simply the legal mechanism is impossible to describe. It seems to me that if you look at this slide there should be one more item between items 6 and 7, let's say item 6A. It may be a panel of experts: a panel of experts of the State Duma or a panel of experts of the government, depending on what you decide. That panel, after assessing the initiative, is obliged, of course, to publicly explain its position. But it either approves it or rejects it.

I'll give you a simple example: the public initiative of introducing the death penalty for such and such crimes, its check for constitutionality. Incidentally, let me note in passing that two days is too short a time, it is unrealistic to check an item of legislation for constitutionality in just two days. This is just a technical issue, perhaps twenty days would be more reasonable. The death penalty does not contradict the Constitution. It contradicts the decisions of the Constitutional Court but not the Constitution. Do we introduce it? Experts may say, no, we cannot introduce it because we have a moratorium under the decision of the Constitutional Court, etc, etc. This is the simplest kind of example. But the idea, if it is posted on the Internet tomorrow, will receive the support not of 100,000 but, you understand, of tens of millions of people. The idea of disbanding the Traffic Safety and Vehicle Registration Agency (GAI) does not contradict the Constitution and I guarantee it would get 100,000 signatures on the very first day. So we need a group of experts that would proceed not only on formal grounds. I think that is an important element that should be inserted between items 6 and 7.  

Vladimir Putin: We should have a joint expert panel of the Duma and the government.

Mikhail Barshchevsky: Perhaps, but this expert panel… my point is that this expert panel must have…

Vladimir Putin: I think you are right. I agree.

Mikhail Barshchevsky: As I said, I am a stickler for detail, and I would like to draw your attention to one formal problem. It’s about obtaining 100,000 signatures on the Internet. I can envision an appeal to the Constitutional Court, if it translates itself into a law, about infringement upon the rights of citizens who do not own a computer with Internet access. We are formally excluding them from taking an active part in civil society.

Vladimir Putin: They can go to people who have Internet.

Mikhail Barshchevsky: I would suggest something different, that it could be 100,000 signatures by Internet vote or a written letter, an identified written petition. There are situations in which you do not know the answer, you know the question but not the answer. But formally, if we restrict this process only to the Internet some old granny will say tomorrow: I have no Internet, I have been excluded from the process of running the state and from civil society.

Vladimir Putin: The granny will go and collect 100,000 signatures? She does not have the Internet but she is able to collect 100,000 signatures? I can’t imagine such a granny.

Mikhail Barshchevsky: I mean, she could write a letter. Mr Putin, I don't have an answer. I repeat, I'm simply drawing your attention to an inconsistency that must be eliminated, though I don’t know how.

Vladimir Putin: All right. Let us think about it together. Yes, please.

Ruslan Gattarov (Member of the Federation Council Committee for Science, Education, Culture and Information Policy): Mr Putin, Mr Shlegel (Robert Shlegel, Deputy Chairman of the State Duma Committee for Physical Fitness, Sport and Youth Affairs) and I represent the Federal Assembly. Since June of last year we have been busy with the issue of electronic parliament within the Presidium of the Presidential Commission on the Development of Information Society. We have written up a concept that was approved in principle in the autumn, but after the proposal that you set forth in your article, which we are discussing today, we decided to tweak it. We have asked voters, the users, how they see the “electronic parliament,” what would they like to be written into the law and what ideas they would like to propose for the “electronic parliament.” You can visit the site at http://dumaem-vmeste.ru. We launched it just yesterday and we received more than 20,000 visits and 200 proposals within two days. This is a parallel track that we are pursuing. We believe that parliament must of course be involved in this work.

Oleg Fomichyov cited an English example, but Germany has a different system: there are also 100,000 signatures supporting the initiative at the Bundestag and after that it goes to a special committee of the Bundestag where a decision is made whether or not it will be further discussed at the specialised committees. Perhaps we should include the whole Federal Assembly, both the State Duma and the Federation Council… That would be right. You spoke about a protective mechanism, well, the State Duma and the Federation Council may act as a protective mechanism. The Federation Council represents the regions while the State Duma was elected by tens of millions of very different people. There are representatives of trade unions and other non-governmental organizations there. And that too will provide a protective mechanism that will keep out (I support Barshchevsky on that point) populist proposals that are sure to gain a lot of votes, and then we will have society on one side – millions and probably tens of millions of people – and the government on the other, saying that this or that initiative has no chance. This is a situation we would like to avoid. My point is that if the proposal to reintroduce the death penalty will again win millions of votes and then the government…  

Vladimir Putin: Let us leave the death penalty alone. Let's take some other new law, for example, a tax law.

Remark: It’s the same for a tax law. A lot of people would vote for some spectacular move, banning one tax or two taxes or three or all taxes.

Vladimir Putin: What do you suggest? For the initiative first to go to parliament?

Remark: Yes, to parliament.

Vladimir Putin:  Bypassing the government?

Remark: And later, we would draft the law together with the government.

Dmitry Kozak: I think we have 780…

Remark: ...Methods.

Dmitry Kozak: ...Creators of legislative initiatives, and suppose the 781^st comes along. A mechanism of work with draft laws is in place, every person who creates a legislative initiative must send the law to the government for an opinion. Today though, this is only done if additional federal budget funds are to be allocated, but I think that this procedure could be expanded to all cases. And there should be no confrontation between the public and parliament, with some people taking the side of the public and so on… It seems to me that in any case there must be the text of the proposed bill, and it should go to the government if 100,000 people have voted for it. The government is obliged to render its opinion and send it to parliament and parliament should make a decision considering the opinion of the government. I think it is politically the most acceptable way, the standard path for a legislative initiative. Only…

Vladimir Putin: We must create a mechanism to sift through the proposals in such a way as to cast aside ones that are unnecessary or impossible and to select everything that society and the state need, while avoiding turning this mechanism into an arena of political struggle. We need technical work with sound proposals that may come from citizens and I repeat, there will be very many such proposals. In order to prevent any political hassle surrounding it, we need a consolidated body. Our colleague here has suggested creating an expert community involving the government and representatives of the two houses of parliament. I think that proposal makes sense. Yes please.

Alexei Arbuzov (Member of the Public Chamber of the Republic of Khakassia): I think that having established “a,” this necessarily leads to “b.” If we encourage the population to come up with initiatives which citizens of our country support then perhaps (and this is just a suggestion) we should let the population itself form an expert community, because this country has enough competent people and specialists in it and not all of them work in the government and the State Duma. In addition to forming such an expert community, crowd-sourcing technology makes it possible to describe the text of a draft law, assess it and complete this cycle. All that is needed is to work out the technicalities of this (I think we even have some precedents) and to establish the rules of the game involving some restrictions, amounts of funding, and then the population, the initiators of the idea can also finalise the draft law. It will only remain for the idea to be examined by the government and for the Duma to pass or reject the draft law.  

Vladimir Putin: Of course, we will not object, on the contrary, we will welcome it if the initiators of this or that idea create some ad hoc expert panel to discuss the idea. It can and must be done, but a draft law cannot be submitted to the State Duma bypassing the government. That is simply ruled out. If we proceeded in that way the retirement age in this country would have been 65 both for men and women by now. We understand that this is unacceptable and unnecessary for Russia today. And such issues cannot be put before parliament deputies without the opinion of the government. But there is nothing wrong, and indeed it would only be a plus if a group or an individual proposing this or that idea launches a call on the web to form a panel of experts, to draw up the text and put it to the public. And yet all the same it should first pass through the government of the Russian Federation.  

Alexei Arbuzov: Perhaps this is a good place to develop the rules and restrictions beyond which a draft law should not proceed. And right here…

Vladimir Putin: We can’t set such a general restriction because if we set, as you suggest, even a few restrictions on funding… Suppose there is an initiative signed by 100,000 people, and we develop some restrictions for it, say 1 million, or 10 million or 1 billion roubles. There could be a billion initiatives for a total of a billion, billion roubles. It won’t work; we will never be able to form a budget because we won’t know in advance what’s included and the potential expenses; and it is senseless to specify a restricted limit for every initiative. And we’ll never be able to decide what’s more important and what’s less important. And somebody will always say: you voted down my important initiative and promoted a less important one, adopted a law and funded it. This will end up a lopsided process.

Alexei Arbuzov: We should look for an option.

Vladimir Putin: That’s why we’re here. Go ahead, please.

Robert Shlegel: Mr Putin, the State Duma website includes a Veche system provided for discussing draft laws. In my view, there are other similar systems, and this Veche system is also good both for forming groups of experts on various subjects and for discussing legal initiatives and amendments that are introduced. It can also identify a visitor on the State Services website. In other words, a visitor needs to be identified. I think ideas that are supported by 100,000 people can have an expert assessment or a zero reading. And then, after that, the subject of the legislative initiative could be determined.

Vladimir Putin: Yes, that’s possible; but what your colleague on the right proposed was for the initiators to form an expert group themselves, then write the draft and then propose it. Did I get that right? I think that’s good. The fact that some experts work at the website on a permanent basis is also good. People promoting an initiative can use this. But they themselves should have the right, the option to use experts, to discuss it with them, to develop the text of the draft law and then to propose it afterwards.  

Robert Shlegel: Maybe an expert ranking? There could be experts with some authority extended to them by the government or the State Duma, and there could be, say, “people’s experts”.  They would have some status and would be active in discussions. Under this system, the more comments you make the higher your assessment based on participant voting and your expert ranking would increase. So as a result there is a more or less measured expert assessment.

Vladimir Putin: No, we will not get a more measured (assessment), we might get good ratings, but this doesn’t mean a measured draft law that can be funded and implemented at all. Although there are many good ideas, there are few that are really possible to implement, this is the problem. We had a good idea to build Communism, but instead we held the Olympic Games in Moscow in 1980, this proved to be less expensive. There are many good ideas, but the possibility for implementation is limited, and we need the expert assessment to include ways to implement a good idea. We need both the idea itself and the ways to implement it. But this doesn’t negate what you’re saying, I don’t oppose that. Of course if there is an e-forum or a website in the internet community, people can and should use it, but it’s not necessary to drive anybody there in a mandatory procedure. If anybody wants and can organise an expert assessment, create an expert group on the web, it is not a complicated task nowadays. It’s possible to collect a group of interested people rather rapidly, make a call and many will respond I’m sure.

Please, go ahead.

Alexander Oslon (President of the Public Opinion Fund): Thank you. I think that the concept of an initiative should be defined more clearly. For example, you get an idea to improve the traffic police, and another idea to abolish the traffic police. These are two different processes: improving is a task, and abolishing is a possible solution. Given a task on the web or beyond the web, whether it’s concerned with law or not, there will always be solutions that can be evaluated with respect to the task and analysed as to how well the task is being solved and what  the possible risks are, that while improving one point, another point will deteriorate. If we do not differentiate between tasks and solutions, many spontaneous ideas will rush forward and create a mess. When we conduct a poll, and we ask these kinds of open-ended questions (what should be done?), we get an unimaginable diversity of answers. Some time ago we even published some of these answers under an article called “You will never invent it deliberately”. It can be very interesting but not constructive. The constructive approach is to set an objective, and then have a person to work on this goal, who is looking through, filtering, appealing to the participants for more active participation in solving this objective. Then an issue like solving the problem of the traffic police develops a framework. The objectives themselves must have ratings, what tasks are priorities. So basically we should rank various tasks with the help of respondents and experts – this is one half, and the other half is solving the problem, and then many things are lifted automatically.

Vladimir Putin: What do you propose in practical terms?

Alexander Oslon: First, the concept of an “initiative” should not be confused with a legislative initiative because the term “legislative initiative” has a definition, this is a legal text. And what they do at the initiative level should happen ahead of a legal text. There should be an entity working on the objective, this entity could be a department or a State Duma group. Given an entity working on an objective, the work will eventually result in a legal text, and then this entity invites the public, activists who are not indifferent to resolving the task. Thus these activists or citizens, their initiatives are linked to this task. If we consider this approach, then everything will be in good order; and if the ideas fail to follow this approach, there will be a mess.

Vladimir Putin: How do you propose to construct this approach in practical terms?

Alexander Oslon: The implementation of this system should include both a goal setting subsystem and a goal solving subsystem.

Vladimir Putin: Now, tell us plainly: there comes an initiative supported by 100,000 signatories, what do we do next? Where is it filed and who and how initiates the work with it?

Alexander Oslon: If there is a process called “formulating the goal,” this goal should be handed over to the bodies that will work on solving the goal.

Vladimir Putin: To what bodies? We have had an argument already – to what bodies? Immediately to the State Duma, to a joint commission – to what bodies?

Alexander Oslon: The most logical thing is for the executive bodies to work on developing the solutions for given goals.

Vladimir Putin: That is to the government?

Alexander Oslon: Of course. But the proposal on the goal comes from below.

Vladimir Putin: I see.

Alexander Oslon: Once there are 100,000 signatures, they should start working on it.

Vladimir Putin: I see. Then, may I draw a bottom line under our discussion. Given 100,000 signatures they can be finalised by two ways: either as a legal text for a draft law (assuming people can do it with the help of an e-community of experts) or by formulating an idea that collects 100,000 signatures. In either case it will go to the governmental level, and as we agreed, not simply to the government, but say to an intermediate link – a commission including both government officials and the deputies of both chambers of parliament. Is that it?

Alexander Oslon: Yes, that’s right, but it’s necessary to keep in mind that the ideas coming from the people can be a task to work on, or can be a proposal of how to solve a certain task.

Vladimir Putin: But both this and the other… When we discuss a possible future legislative initiative, in order to get to this status, (this initiative) should go through the filter of this commission that we have mentioned.

Alexander Oslon: Sure, and then it should be filed with one of the possible sources of the initiatives. Are there 780 of them?

Vladimir Putin: No, look: this idea would be discussed by this joint commission of the government and both parliamentary chambers and is constantly in the view of the initiator, author and the whole community supporting this idea because the discussion of the text, formulating the problems, tasks and solutions will always be openly available on the web.

Alexander Oslon: Creating and discussing the legal text – that is the process of solving the goal.

Vladimir Putin: In part.

Alexander Oslon: And this work will result in the legal text of the draft law.

Vladimir Putin: Yes. I want our discussion to conclude not with a question mark but with a full stop. When an initiative, in this form or a different form, is filed, it is forwarded to the expert commission which we mentioned. The latter discusses it openly and reaches a conclusion: either to advance it further or to dismiss it with an explanation as to why it cannot be implemented. Is that so? I see your point, thank you. Go ahead.

Pyotr Shelishch: I would suggest going back to the previous threshold, as the key question is, what is a legislative initiative? I believe that only a draft law should be considered a legislative initiative, since a proposal to draft a new law On Communications… How will you react to it? Maybe we should…

Vladimir Putin: The expert commission will discuss it, and, in a transparent manner with clear justification for its position, will decide that the issue should not be considered. As simple as that. 

Pyotr Shelishch: I believe everything that has been said here by colleagues and has been backed by you is absolutely right. We can certainly have public discussions of various ideas with the aim of turning it into a draft law. But the authorities should not be bombarded by ideas, they should be dealing with draft laws, otherwise it would be very inefficient. 

Vladimir Putin: Are you saying that ideas should not be considered, even the ones which have received 100,000 votes, and that only draft laws submitted by various groups or individuals should be accepted for consideration?

Pyotr Shelishch: It will help unite citizens around a certain idea.

Vladimir Putin: I see. I would then address that question to the speaker who presented the report, the Deputy Minister of Economic Development. Did you mean that it should be legislative initiatives in the form of draft laws or just ideas?  

Oleg Fomichyov: Obviously, we meant ideas since we believe it would be wrong to expect that an individual could draft a document in a legally correct form. Besides, we are not suggesting that the government should necessarily consider all such proposals. We have many entities that can submit legislative initiatives.  

If a deputy drafts a bill based on a proposal that has received 80,000 votes, and submits it for the government’s consideration, and the government approves it, very good then. In this case the government would have been spared from the need to draft that bill. So, in that sense, I do not see any risks here.

All the other ways of submitting legislative initiatives to all appropriate parties have been maintained. This particular way, which requires the government to consider the initiative that has received 100,000 votes, will indeed be a difficult task for the government. And naturally, we should set certain conditions as to how such initiatives can be formulated.  

The same British website has clear instructions, explaining what an e-petition is and what it is not. We can also specify the type of ideas that could and could not be submitted and in what form they will be accepted.   

Vladimir Putin: Ok, do you want to add anything?

Oleg Fomichyov: Yes.

Vladimir Putin: Please.

Oleg Fomichyov: That was the first issue. The second issue has to do with how discussions are held. We have discussed ways to initiate certain legislative changes, but citizens should also be able to actively participate in the discussion of existing draft legislation.

Here, too, we can take advantage of information technology. Slide eight lists practices used in foreign countries. Just two examples that are used practically everywhere in Europe and Asia. Public consultations… these are European and American.  

On slide nine you can see what already is being done in Russia. First, the pravo.gov.ru site provides for public expert review of socially important legislation. 

The second website will be launched in August. It will publish all draft laws that are under examination for regulatory impact. We also propose that all draft laws considered by the government should be published on this website. 

What will this help us achieve? We already have a requirement for all draft laws to be published on the internet, but this requirement only applies to the websites of the agencies drafting that legislation. Clearly, for an ordinary citizen it is very difficult to search for these laws on the agency websites and to figure out which agencies’ and companies’ websites he needs to monitor to obtain that information. Therefore, we are proposing to create a single database.  

Slide 10 shows how it will work. Essentially, it is designed as a bulletin board, which contains information on all draft legislation and all draft government bills. This website will provide information on all existing draft laws and at what stage of readiness they are: still being drafted, under public discussion, or already finalised.  

Naturally, this does not mean that they could not be discussed on other platforms, but this website will be the official source for information on all laws and regulations, and will provide an easy and convenient way to access. 

Now, please turn to slide 12. Here we are talking about transparency, which is a key aspect for ensuring people’s involvement in improving the country’s governance. Today, some of our laws and regulations are quite good. These include the law on ensuring access to information, the related government resolution, the technical regulations, the regulations on linguistic and other means, etc. In essence, this means that we have the necessary legislative framework in place, which ensures citizen’s free access to information.

According to our monitoring results, in 2011, 53% of the federal agencies’ websites provided the necessary level of openness and transparency. The rate was slightly higher in the regions, with 64% of the websites meeting the transparency requirement. The municipal websites (in 12 cities with a population over a million people) provided a very low level of openness. Overall, the positive trend is quite clear.   

We are also proposing to create a public oversight mechanism of sorts by providing an opportunity to click a special evaluation button when visiting government websites. This information will be then received in one place, serving as an oversight mechanism. The public evaluation will be available in addition to the professional assessment of the website, which will be done by experts.       

The next slide describes a very important aspect of openness. All government agencies accumulate enormous volumes of information, which could be used by the general public, software developers, and other interested parties. This information is not classified, but it is not available in electronic form.  

Examples of such information include data on state expenditures, information on the location of schools, hospitals, kindergartens, etc. In the United States, for example, this information is available on the websites and in the form of applications for mobile phones, tablet computers, etc. This allows people to get access to information on crime rates in their area, the nearest medical facility, etc.

In Russia, all regional energy companies publish their tariffs on their websites (in accordance with the new requirements), but the format of the information varies by region.

We could create a calculator that would collect all this information, allowing businesses to calculate in just three clicks energy tariffs in their region and municipality. We do not even have to invent anything new; the information just needs to be available in electronic form. We are planning to introduce a procedure requiring government agencies to make this open information available to the public by mid-summer.

Next slide please. Speaking of the need to ensure government transparency and public oversight, we have been conducting various monitoring programmes over the past few years to assess the quality of government services. 

We propose to combine them in order to receive information on each government agency and government service from various sources, including expert monitoring reports, citizen reviews, and public opinion surveys. This will allow us to realistically assess the quality of the service provided, taking into account both the public opinion and the results of independent assessments. 

I think we will still address this issue during our discussion today. I am referring to the pre-trail defence issue, which you raised in your article. Specifically, you wrote that “public opinion will have the right to file lawsuits to protect the interests of its individual members.” This means that citizens will not be left to their own devices when dealing with government agencies.

As a ministry we are mainly responsible for the provision of government services to the public. Therefore, my comments will refer to this specific area, and the Ministry of Justice can address the issue from its perspective. The problem is that there is no pressure from citizens with regard to the quality of government services. For them it is cheaper to pay a small bribe than get involved in lengthy litigation.

Our efforts to improve the quality of services from above by streamlining the activities of individual officials have not been very effective so far. We have introduced a pre-trial appeal procedure, which simplifies the appeal procedure for citizens, but it does not solve the issue of dealing with a government agency on one’s own. Therefore, as far as government services are concerned, we propose to amend Law No. 210 allowing public organisations to protect the rights of individual citizens.     

The last slide, No. 17, is our proposal for specific instructions. The deadline for two of them is September 1. It could be moved forward to an earlier date but we think that these two merit a broad public discussion. We are approving a decision on public debates, so public views mustn’t be disregarded in our own decision-making. People should also be protected from red tape at the level of individual officials. The same goes for businesses. (I think they will state their case later today.) There are two options where introducing the position of Commissioner for Business Rights is concerned. Number one is a government-level independent. Number two involves the Prosecutor General’s Office. We are not yet ready to choose any particular option. Discussions continue. We suggest that we cooperate on these issues as well. Thank you for your time.

Vladimir Putin: Thank you. Any comments on this issue? Go ahead, please.

Fania Khakimova (General Director, Bus Terminals and Auto Stations of Samara Region): Thank you. I am Fania Khakimova. To my mind, we need a law that would say how to draft and table a bill, a law specifying the timeframes for its examination, discussion and approval by the legislature; where to place the law, or why a draft law was turned down.

Vladimir Putin: What timeframes? For these initiatives?

Fania Khakimova: No, for a draft law.

Vladimir Putin: A draft law that may arise from this initiative?

Fania Khakimova: Yes. I mean we need a general law in any case, a law that would explain how to draft and introduce a bill, how to discuss and expedite it through parliament…

Vladimir Putin: Do you mean legislation that would trace the fate of this initiative?

Fania Khakimova: That’s right.

Vladimir Putin: That would regulate things…

Alexander Shokhin: Mr Putin, I think we are speaking about the draft law that was approved in the first reading by the Duma in 1996. But there has been no progress since then. It is a law on the procedure for approving federal laws, federal constitutional laws, which could be made to incorporate a procedure for discussing these public legislative initiatives.

Vladimir Putin: We could have it this way or devise a separate law for these initiatives.

Alexander Shokhin: The two are interconnected. This could be regulated by separate laws, of course, but we have increasingly felt the need for this kind of law lately. The business community has long insisted on holding public discussions before each second reading because on many occasions draft laws presented for a second reading were a far cry from those that had been discussed with us within the framework of public procedures before the first reading. I mean some of the key laws: the anti-monopoly legislation; the Code of Administrative Offenses, which unexpectedly reiterated the rule on a 90-day suspension of organisations although it seemed to have been deleted and replaced by administrative fines; the pension reform, etc. We also have the feeling that all four parts of the Civil Code will be approved very quickly outside of any public discussion. If we have this law that would authorise public procedures before the second reading, this will make things easier for everyone, including civil society that will participate in all stages of legislative debates, no matter who introduced the draft laws – not only the initiatives that follow the pattern we have discussed earlier but also all other initiatives introduced by those possessing the right to move legislative initiatives, as well as draft laws introduced by the federal executive authorities.

Mr Fomichyov has spoken at length about how to evaluate regulatory influences… The government is going to issue a decree on the procedure for and evaluation of regulatory influences and on debating whether or not it is expedient for actually all the federal executive authorities to approve this or that law. We think that this is a very important decree that should be issued as soon as possible, even though there are some problems. Specifically, it would be wrong to extend this procedure to both legislative acts sponsored by the federal executive authorities and, say, draft governmental decrees, or to put a broader interpretation on issues to be evaluated for regulatory influence. In particular, all draft laws and legislative acts that need to be coordinated with the Ministry of Economic Development could also be evaluated for regulatory influence. There are a number of other problems involved in how to improve the evaluation of regulatory influences, but the key things in this regard are the second reading and the Government’s pending draft decree. We would like its approval to be expedited.

Vladimir Putin: All right, we will take this into account, but the proposal… We have been discussing a specific subject that has much to do with civic initiatives. I’d ask the ministry to keep this in mind. We must indeed have a clear-cut procedure for the legislative handling of those initiatives, which would prevent them from passing away one after another. We must know their fate. If they are rejected, their sponsors must know the reason why this happened. If they are at some stage of consideration, or got stuck somewhere (which is quite conceivable, given the complexity of problems at hand), the participants in this process should know what is going on, and at what stage in the discussion they are. Think about it.

Fania Khakimova: What I meant were not only the civic initiatives but also any legislative initiative sponsored by public organisations, legislators, constituent entities and members of the public… I mean we should have a general law that defines the procedure for the legislature’s treatment of draft laws, the drafting of laws, and things like that.

Vladimir Putin: But this is, in effect, what Mr Shokhin was speaking about.

Fania Khakimova: Exactly.

Vladimir Putin: Mr Shokhin said the same thing. He just repeated your proposal. But this fully applies to the civic initiatives that we have been discussing.

Boris Titov (chairman of the Delovaya Rossiya business association): Thank you, Mr Putin. I’d like to comment on the part of the report that concerns the public defender and the ombudsman. This is a broad discussion, but regarding crowdsourcing, we have conducted it with respect to the ombudsman. We have also held voting on this issue in our association, receiving hundreds of replies, with over 80% of people in favour of establishing the post of a defender, or an ombudsman, who should have business experience and should be also respected as a government official. In other words, this person should act as an intermediary between the authorities and businesses.

It should be said that the second initiative is interesting as well, but frankly, I cannot imagine… For example, when we speak about a public defender… The ombudsman should also act as a public [defender], for example in court. But it is very difficult to imagine a prosecutor supporting the defender, because the duty of a prosecutor is to sustain charges. They are attackers, while the protection of business should be... Hence, there should be a special defender, a lawyer to protect business, who would speak [in support of business] in court and otherwise act as a defender.

Here is one more argument for why this position cannot be held by a prosecutor: a prosecutor, even a deputy prosecutor general, will be always influenced by the opinions of his or her department and will never be fully independent. The efforts of a prosecutor [who is appointed a business defender] will certainly be influenced by his or her post... He or she would defend the interests of business, but would still be influenced by the perspective of his or her department and hence would not be fully independent. We should find some other solution... The Economic Development Ministry has proposed that such a person hold the title of deputy prime minister, which is a good idea because this person will have many powers, but he or she will not be fully independent either. We should consider other combinations of power and independence, but we still think that the post should be filled by a lawyer.

And one more thing about the public defender: We believe that this is not enough, because there are some issues on which the public defender will have to function as plaintiff on behalf of an indeterminate number of people. This person's powers as a lawyer, as a pubic defender, will prevent him or her from simultaneously appearing in court as a plaintiff. We should work on this issue further, so that both public organisations and the ombudsman will have the power to appear in court as a plaintiff on behalf of an indeterminate number of people.

Vladimir Putin: Just a moment. Mr Borisov, go ahead.

Sergei Borisov (president of the OPORA Russia public association of small and medium-sized businesses): Mr Putin, we must not throw the baby out with the bath water. This discussion is proceeding as though we still did not have a relatively well-developed civil society, as though we were starting from scratch, expecting to receive a number of initiatives, so that people will start generating creative ideas and Twitter users will join in. We are now looking for expert venues, considering what they could be like, but when we needed to evaluate the impact of our regulating efforts, when the commission on administrative reform was established and worked very efficiently, just like the commission on lawmaking… They incorporate effective institutions of civil society – I believe that Anna Popova (Deputy Chief of the Government Staff) and Anton Vaino (Chief of the Government Staff) can tell you how these institutions are working there. Maybe we should create an algorithm for attracting the expert community, which is sufficiently well-developed in our public organisations, to evaluate initiatives when their numbers reach a certain level, say 10,000, 15,000 or 100,000. Have we been growing during that difficult period in vain? Must we sit back and watch this process as passive observers? We are ready to contribute, to provide expert evaluations, that could help determine whether a project is practical. I believe that civil society institutions, which currently cover nearly all aspects of our life, should be integrated into this new system.

Vladimir Putin: Go ahead, please.

Sergei Katyrin (president of the Russian Chamber of Commerce and Industry): I support this view. We have a streamlined mechanism, which functions efficiently in the government and is good for relations with the State Duma, for regulatory impact assessments and for everything that follows. Therefore, if we want to take people’s initiatives into account, we should improve the organisations that we already have – the government commission and other commissions.

You mentioned the issue of a platform. I believe that a combination of the State Duma platform (the veche, moot, or however the Economics Ministry described it) and this expert platform would be quite efficient, if complemented with other tools that we have at our disposal in the government and in our relations with the State. As for establishing parallel structures… They would hinder the efficient operation of our existing tools, and it is unclear when these new structures could become efficient. Therefore we should use what we have, this expert platform, for implementing these initiatives.

And secondly, concerning the prosecutor: I agree that this new post should not be filled by a prosecutor, but by a businessman who would also defend our interests. I am not sure that he should be fully independent. Perhaps he should be a member of the government accountable to the Prime Minister, provided that he is only charged with protecting the interests of businesses and is not burdened with other responsibilities. Thank you.

Vladimir Putin: Thank you. I understand your view on the second issue, but have a few questions about the first issue. Are you against using the Internet for approving an idea, or collecting 100,000 signatures? Or do you propose some other procedure? If so, what?

Sergei Katyrin: Mr Putin, I am in favour of implementing ideas. In summing up part of our discussion, you asked if we suggest establishing a discussion platform that would consider ideas before they are put through to the government commission on lawmaking. I believe that this is a good idea. Simply put, I suggest that this venue should integrate the efforts of the State Duma in terms of the veche project, and the ideas of the Economic Development Ministry.

Vladimir Putin: So, you suggest inviting to this venue, the commission, not only government experts and deputies of the two houses, but also…

Sergei Katyrin: Exactly.

Vladimir Putin: …but also experts from the Chamber of Commerce and Industry, the Russian Union of Industrialists and Entrepreneurs, correct?

Sergei Katyrin: Yes, I believe that if we expand this platform, it would benefit the mechanism that the government has at its disposal. There is a commission on lawmaking, and if we believe that it should be complemented…

Vladimir Putin: Business representatives could take part in discussions that concern businesses.

Sergei Katyrin: I would like to say that we are not complaining, because we have the opportunity to defend our views even now.

Vladimir Putin: No, what I mean is that an expert commission proposed by our colleague for the initial consideration of these initiatives should include not just government members and deputies, but also representatives of public organisations and businesses. Yes, go ahead.

Georgy Belozyorov (chairman of the national public organisation The Russian Managerial Community of Participants in the Presidential High Potential Managers Programme): Of course, we should and must create such a mechanism, yet I would like to say that civil initiative is definitely not limited to lawmaking. It is important to create a platform which citizens would use to participate in the strategic planning of the country’s development in different spheres and areas, and from there would move on to legislative initiatives and also lead to the involvement of people in national development projects. This would help us consolidate society around these ideas and programmes, thereby ensuring maximum effectiveness and involving people and organisations in the development of the country.

Vladimir Putin: Yes, of course, this is a good idea that could and should be implemented. But we are discussing a practical issue: how can we implement the idea that has to do with public initiatives which could lead to the formulation of legislative initiatives? As you see, the issue involves very many questions and details, which we need to discuss. It is not enough to say that something is a good idea – we will need to put it down on paper, monitoring its progress and subsequent realisation. On the whole, you are right in that we should apply this principle more broadly, but this is why we are creating the electronic government. It is a broader platform, which you suggest using for dealing with larger issues. I agree.

Mikhail Barshchevsky: Since someone mentioned “lawyers” here, I must say something. I am referring to the issue of the ombudsman. There is a notion of professional deformity. In the 130 years since the establishment of the Russian bar association, not a single prosecutor has become an outstanding advocate. The prosecutor is focused on exposing the breaches of law and preventing them – if he is a good prosecutor.

Vladimir Putin: But some judges have become advocates.

Mikhail Barshchevsky: Yes, some judges have.

Vladimir Putin: I believe that Koni was both a judge and an advocate.

Mikhail Barshchevsky: No, he was a prosecutor and a judge, but never an advocate.

Vladimir Putin: So, he did not become an advocate?

Mikhail Barshchevsky: No, he did not.

Vladimir Putin: And who has?

Mikhail Barshchevsky: If we're talking about that period, then there's Plevako and Alexandrovsky… There were many things that we can be proud of. Consequently, in my opinion, a prosecutor is inclined to “arrest and to keep intruders out,” as Mr Titov said.

As for that ombudsman, the situation is like the joke about the lady who does not really know what she wants. Technically speaking, the specific powers don’t matter if his functions are unimportant. If that is the case, his influence will be purely symbolic. This creates good opportunities for PR stunts, but nothing good will come of it, unless the ombudsman receives real powers enabling him to suspend the decisions of other agencies pending the court appeal of this decision … A person with specific powers who is part of the system cannot be independent. This is simply impossible.

Vladimir Putin: Why is that? What about human rights activists? Why?

Mikhail Barshchevsky: They are part of the system. Actually, this is a human rights ombudsman who …

Vladimir Putin:  He has … But how? He is an independent person. Who does he depend on?

Mikhail Barshchevsky: I’m not talking about independence. I’m saying that he is not part of the system. He should not be left to his own devices, but he should be made a part of the system, no matter what.

Boris Titov: I think that special legislation should be passed that deals with ombudsmen. As a result, he will certainly be included in the system.   

Mikhail Barshchevsky: Yes, that’s exactly what I mean. In effect, he should have a defined range of powers. It does not matter whether he is a deputy prime minister, a human rights ombudsman or a children’s rights ombudsman. Incidentally, to the best of my knowledge, these two ombudsmen complain about their lack of real powers to intervening quickly in specific situations. As for business operations, they are unable to suspend the decisions of government agencies and those of investigation divisions.

Vladimir Putin: You see, this institution should not function as a substitute for other institutions, including courts and government agencies. There are courts …

Mikhail Barshchevsky: That’s why I’m saying that such decisions should be suspended, rather than rescinded.

Vladimir Putin: What did Boris say? He said that they should at least have the right to act as plaintiffs in court. Yes. If you simply walk into court and file a lawsuit concerning any specific event or organisation, then no one will accept your lawsuit. They'll say: “And who are you? Go away. Let people take their case to court who think that their rights have been violated. What are you doing here?” What is Boris talking about? He wants ombudsmen to be granted such rights.  

Mikhail Barshchevsky: This was my third point. This official post would be pointless unless they are given the right to file lawsuits with regard to an unspecified category of people. In that case, they would simply act on behalf of some specific business person or enterprise. But the thing is that the Code of Administrative Offences makes it possible to suspend the operation of an enterprise for a period of up to 90 days. Mr Shokhin has mentioned this. In effect, this makes it possible to bankrupt the enterprise. If a business ombudsman does not have the right to suspend this decision, then his right to take the case to court, taking into account the length of court proceedings … It will be noted 85 days, instead of 90 days, after the submission of his lawsuit that the decision to suspend operations was wrong. And what happens next? It's just like raider takeovers. All raiders eventually lose their cases in court, although belatedly. 

Vladimir Putin: We have to think about this. I agree that this person should, without doubt, have certain rights. These rights need to be clarified. Actually, these rights should not take the place of other state agencies. Otherwise their work would be pointless. In that case, we would need an ombudsman to protect the rights of courts and prosecutors’ offices because they would think that their rights are being violated all the time. They would think that their rights are being violated while they are defending all of society’s interests. Their actions can be appealed if they circumvent the law. They should have the right to take a case to court. Perhaps this is not enough. I agree that this issue remains open, but we will discuss it separately. What else? That’s all. Thank you.

We have heard different viewpoints. I would like the Ministry of Economic Development to consider all of them while drafting their final proposals. I think that virtually the entire discussion has been constructive. We have argued here a bit. But, on the whole, I believe that we have reached a consensus on the following points: this initiative is correct; and that the initiatives of private individuals should be meticulously assessed on an influential and important platform. This platform should not be politicised and should not be used as a place for different political forces to advertise and promote themselves for their own purely political interests. This should be a professional platform, one that would involve government experts, deputies of both parliament chambers and representatives of public organisations, including business organisations, and maybe someone else. We should think this over. After that, we will act in accordance with this concept … That’s what our colleague has suggested to us. I believe he is right, and that this should be formulated accordingly. The rest will be assessed in accordance with your concept. But we should also not forget an issue that was mentioned here. That is, we should know how this initiative will be passed.

Remark: The procedure.

Vladimir Putin: The procedure. This should be streamlined and formalised by the relevant regulatory documents. Thank you. Mr Shchegolev, go ahead.

Igor Shchegolev: We have discussed the platform to a large extent. In my fifth slide, I indicated problems that exist in this sphere. Indeed, we have launched many different websites and portals, and we are continuing to do this. These websites and portals either facilitate this discussion or are intended to do so. In the long run, of course, we largely disorient people who have to look for websites discussing grassroots, regional and federal initiatives. Therefore, it would be appropriate to establish a general website in the context of our discussion. Such a website would enable citizens to search for information on nationwide and regional developments. We have implemented a similar approach in connection with the state services portal, which can be accessed using a standard interface. Consequently, people don’t have to look for other websites in order to access the portal.

In this context, I would like to suggest that our draft decision should not be linked with any specific solution, as is the case with the site www.regulation.gov.ru, because this is only a governmental initiative. Rather, we should think about creating a major instrument that would allow people to speak their mind about all sorts of legislative initiatives, including their own initiatives and those drafted by members of parliament, as well as by regional and federal agencies. One of the tasks set forth in your article was about how this discussion cannot be anonymous. In other words, we can only examine only those  initiatives that have been submitted by people who don’t shy away from affixing their real signatures. We have created such an instrument, namely, a joint identification and authentication system, which is being implemented under the “online government” project. There are several mechanisms for obtaining this kind of electronic signature and gaining access to such portals, and we suggest using this system during the discussion of specific bills as well. Our colleagues from the Ministry of Economic Development support us on this score.

In that case, we will know for sure who is behind any particular initiative. We will delete the majority of improper comments and initiatives and will come to a legally sound discussion.

Moreover, we plan to introduce a state electronic mail network. This will be a two-way communications channel with Russian citizens. This system will not be anonymous either. Each person will have a personal mailbox, and the state will personally inform him or her about the official response to specific appeals, including requests for state services or legislative and other initiatives. We have also created such an instrument, and we expect it to be running at its design capacity this May.

We have another instrument called the On-Line Portal of Electronic Democracy. But, as far as I understand, we don’t plan to go beyond examining specific bills. This has been mentioned by our colleagues. This instrument enables our citizens to receive feedback from all state agencies, and to assess the initiatives of such agencies and their current activity. People will also be able to formulate initiatives. Such projects already exist. Some people address the issue of potholes, others demand better lighting or improved quality of mobile communications. We could also accumulate the proposals of our citizens and the points that they are making as part of this major project. This website currently operates in several regions on an experimental basis. We hope that it will encompass 50% of regions by mid-2012. In that case, it will be possible to draw specific conclusions and to decide how this website can be adjusted. Therefore, we are ready to receive proposals and to cooperate with our colleagues.

We have created a range of instruments for these purposes, including a website designer that is primarily being used by municipal entities. This is another issue for discussion. Their revenue is not very substantial. They cannot often be completely included in the online government mechanisms, and no feedback is facilitated because they simply lack the funding to create such websites. We have developed a website designer, and we provide it to municipal entities free of charge. They can use it to make their own websites, provide declassified data about their work, and all this can be integrated into the existing online government mechanism. We have accomplished a lot of work, we wanted our colleagues to know about it, not to forget this and to more actively include this in their regulations.

Vladimir Putin: Please.

Robert Shlegel:  I would like to support Mr Shchegolev and to say that, in my opinion, we need a common decision-making infrastructure, one that would also receive appeals and facilitate the discussion of bills. And, of course, this infrastructure should not be anonymous. It could be an online state portal. Any person touching upon issues that can influence the state’s development should not make anonymous comments or submit anonymous proposals. He or she should be a Russian citizen. This is a matter of identification. In my opinion, it would also be appropriate to facilitate the public discussion of all bills being submitted in any form to the State Duma. We can streamline the relevant regulations, so that deputy heads of the concerned committees would be able to comment on the results of the public discussion within the State Duma.

And another thing: we’ve said that 100,000 votes is enough to get an initiative onto the federal parliamentary agenda. But then, the regions also have their legislatures, where a smaller number of votes might be enough. So this infrastructure may be relevant not only to the federal parliament but also to the municipalities, regional legislatures and city councils. In this sense, the system we have mentioned – for instance, based on the veche, the mediaeval popular assembly – should belong to the state. There is a corresponding code that could be disseminated to the various constituent entities of the Russian Federation, like building blocks out of which all kinds of things might be made. Thank you.

Vladimir Putin: Okay, I have no objections. Please go on.

Oleg Fomichyov: I have only two things to say. We fully support everything that has been said here. First, for the identification and authentication system: it should really be a unified national system. As I see it, we need to be more careful with the mandatory aspect of it as it applies to different kinds of discussions because, when we are talking about legal significance, the system must function if what matters is that every Russian citizen can express his or her opinion and every vote is counted.

When we are dealing, however, with expert debates on a departmental website on a particular initiative, it doesn’t make sense to have such stringent requirements. Otherwise, we risk excluding from the discussion many users who just want to express their opinion, but if they have no identification number, they have to first register on the relevant website, receive a login and a password by email or through Rostelecom, and so on. So maybe the mandatory identification system should only apply to legally significant discussions.

My other point concerns...

Vladimir Putin: What do you mean by legally significant? We don’t know yet whether it will be legally significant or not.

Oleg Fomichyov: I mean a discussion as a result of which a government body would be obliged to take public opinion into consideration and promote the relevant initiative. We need identification, particularly where regulatory impact assessment is concerned. But when some minor idea is discussed on a municipal website, we could possibly do without it.

Vladimir Putin: I see. You mean discussions on matters vital to the population of some particular region. But in that case why do you think they would need anonymity?

Oleg Fomichyov: I’m not saying they need it. They could just register on the website and give their full name and personal details. That’s mandatory, but we are talking about a different system, one that is unified for everyone within the e-Government framework. This system uses a single id for the state services portal. Possibly, in the future…

Vladimir Putin: I don’t quite get your point. Do you think it will be too much of a hassle for the general public?

Oleg Fomichyov: No, but not everyone has an id yet, so we have to get everyone registered first.

Vladimir Putin: Mr Shchegolev would like to speak.

Igor Shchegolev: To be honest, only two million people registered within a year. Things came to a standstill due to a variety of problems. But that has been sorted and now there are no obstacles standing in the way of registering. After all, when we collect signatures for, say, a referendum or to nominate a candidate for an elective body, we ask people to show their passports or give their passport details and address. This system brings it all together. So when we have 100,000 signatures, we will know for sure that the signatories are real people and not some made-up fictitious characters. After all, 100,000 fake signatures can be created in no time – but that will not result in a legally valid decision. We want every citizen to be aware of his or her responsibility when they take part in this type of online petition. After all, registering and getting an ID is not that difficult.

Oleg Fomichyov: I just want to say that that’s correct, in principle. We have two million Internet users now…

Vladimir Putin: No, no, no! We have to look to the long term and get it right from the very start.

Oleg Fomichyov: There is another thing I’d like to mention.

Vladimir Putin: No, first say whether you agree with Mr Shchegolev.

Oleg Fomichyov: On the whole, I do regarding the future, but I think that at present… Only two and a half, at most three million people out of the entire population will be involved in our online discussions this year and next, though we have 20 to 30 million active Internet users, so we are…

Vladimir Putin: Listen, we can discuss whatever we like, and everyone who wants to can take part. We say that if we want an initiative to become legally binding …

Oleg Fomichyov: That’s it! That’s exactly what I’m saying: it matters when every vote counts, but when we’re dealing with some online discussion where you just have to click the “Like” button…

Vladimir Putin: So who’s stopping it?

Oleg Fomichyov: It’s just that we were saying we were going to apply it to everything…

Vladimir Putin: Yes that’s how we took it, of course.

Oleg Fomichyov:  If it is, then…

Vladimir Putin: Yes of course.

Ruslan Gattarov (member of the Federal Assembly Federation Council Committee for Science, Education, Culture and Information Policy): Mr Fomichyov says that people can register via their social network accounts but that means they would be deprived of the right to vote – they would only be able to discuss things, mention pros and cons but not vote. Have I got that right, Oleg?

Oleg Fomichyov: Absolutely.

Ruslan Gattarov: So we give them the right and attract a great many people to the website who will eventually acquire full access and can start working. We’re not turning them away right now.

Vladimir Putin: Agreed. Please, Mr Schlegel.

Robert Schlegel: I just want to add a few words. I think registration is fine as a filter. Even when it comes to social networks and their registered users, they might be registered outside Russia but they can indirectly influence the discussion by evaluating it from the outside. But when they are authorised by some legal means...

Vladimir Putin: So you think it’s still needed even if they are only taking part in a discussion?

Robert Schlegel: Mr Putin, when a state organisation holds a discussion on, say, the State Duma website, concerning a bill that has been submitted, and public opinion will be taken into account by a particular committee and so on, I think only registered users should be allowed to take part. That’s quite normal. There is a million of users now, and millions will continue using the Internet. We should encourage them to join the system and use state services because that would reduce costs and everything on...

Vladimir Putin: So you’re afraid fake users from unidentifiable sources might influence discussions?

Robert Schlegel: Suppose I’m a discussion participant authorised through state services, and I propose an amendment within that discussion. If someone doesn’t like my amendment, he might resort to using programmes, not people, and I will have problems in public debates or elsewhere in the process of getting my amendment passed. The press will say to me: “Your amendment has received a huge number of ‘no’ votes.”

Vladimir Putin: I see your point. It’s certainly logical. Think it over please.

Oleg Fomichyov: Let me say a few words about www.regulation.gov.ru. I particularly emphasised that it should be a single portal because, even though discussions might be held on many platforms, opinions should be collected in one place – or we will not know exactly where to look them up. We need only one official portal, while discussions can be held on Facebook or anywhere else.

Vladimir Putin: Is there anything else? No?

Thank you for your opinions, they will be taken into consideration when the final decision is made. As for the last remark but one, I think it’s well grounded. We should encourage people to identify themselves if they want to discuss matters of national significance. What’s so unusual about that?

Remark: All the more so since there’s even a tool for it.

Vladimir Putin: Yes, there is a tool, so please carry on working. Continue your discussion, and then let me know the final outcome.

I think our next issue should be struck off the agenda because it needs more preparatory work – including the involvement of the judiciary. I don’t see anyone from the judiciary here except our court representative, and they must join in the discussion if it is to be held at a professional level. So we will take up the matter a bit later. We are not removing it from the agenda, but we will discuss it a little bit later. In this connection, Mr Siluanov has the floor.

Anton Siluanov: Thank you, Mr Putin. You have given a series of instructions to redistribute fiscal and non-fiscal revenues to local budgets, and I would like to comment on some of your orders and update you on their progress.

First, you ordered that normative tax deductions on special tax regimes be transferred to local budgets. Today revenues from taxes paid on the simplified system actually do go to regional budgets. However, local budgets have a greater bearing on the administrative aspects of taxation, and on the development of small and medium-sized businesses, so there is a real need to shift such revenues to local budgets.

In this connection, we propose that taxes paid on the patent system be transferred entirely to local budgets. Amendments to Article 18 of Part One of the Tax Code have been approved in the first reading. We propose adding another amendment for all such revenues to be transferred to local budgets.

The next item concerns the remittance of flat agricultural tax returns. At present, a part of the single agricultural tax goes to the regional budgets and a part to the local budgets, so we propose transferring 30% of the regions’ share of such revenues to local budgets. That will be about one billion roubles. The relevant laws will be drawn up, and we hope they will be adopted quite soon.   

The next task is to streamline and reduce the number of federal exemptions on local taxes. We have two local taxes – one for land and one for private property. As far as the land tax is concerned, we propose abolishing privileges stipulated by the federal law for certain categories of land outside of circulation. I mean the land owned by the Defence Ministry and the Federal Penitentiary Service, plots surrounding nuclear power plants, and suchlike.

We propose a gradual change. Land tax rates for such plots should be established at 0.3% of their cadastral value, and federal tax breaks should be gradually phased out, at a rate of 0.1% a year, over the next three years. We also propose putting an end to tax breaks on corporate property, but over a longer time period of five years.

Vladimir Putin: I hope you realise that as we discuss and draft the federal budget…

Anton Siluanov: Yes.

Vladimir Putin: …you will have to provide additional funding for certain agencies?

Anton Siluanov: Certainly. On the one hand, it isn’t real big money. On the other hand, that’s why we think we need to take a phased approach.

Vladimir Putin: The Defence and Justice ministries in particular, and many other agencies as well, will need their budgets topped up, and Russian Railways and other network companies will apply for extra funding.

Anton Siluanov: Mr Putin, that’s absolutely right because not all agencies who own significant property have all the information available about what they own, what land plots are in their possession. So we think this decision is absolutely correct. As for extra funding, we will discuss each issue with the relevant recipient. We will first of all analyse their internal reserves, and if they don’t have such provisions, we will have to increase their allocations. I repeat again we are not talking about large sums: we estimate the total land tax payments of all law enforcement ministries and departments is about five billion roubles, if the proposed solution is brought in gradually.

Vladimir Putin: What about the big companies who own tens of thousands of kilimetres of railway lines, pipelines, power lines and the like?

Anton Siluanov: In the first place we are talking about land that has been taken out of circulation. As for railways and other such companies, they will be mainly affected by property taxation. So we are talking about land tax here, and I think we will start implementing the decision next year.

Vladimir Putin: Good.

Anton Siluanov: Our next task concerns the introduction of local property tax. We have prepared a draft law and coordinated it with the Ministry of Economic Development. It all now depends on when the property cadastre will be ready. We expect to have it by the end of the year.

The question is whether we will be able to introduce the tax everywhere next year. That will be quite a problem because 12 Russian regions are taking part in a pilot project to create a cadastre of land plots and the property on them. This property registry should be ready by the end of the year.

We are doing everything necessary to create such cadastres in the other regions, too. If we manage to do it by the end of the year, this property tax can be introduced in all regions. It will bring land and property taxation together, including private property. It will be a local tax, and will depend entirely on the drawing up of the relevant cadastre.

There is another option: we could introduce the new tax in two phases – firstly for the regions that have the cadastres in place and then, the following year, for the other regions that still have to create them. The draft law is ready, and we will introduce the tax as soon as the cadastres become available.

The next issue concerns channelling the revenues from fines imposed for violating the regulations on district area improvements into local budgets. They currently go to the regional budgets. The government is currently considering the relevant draft federal law, submitted by members of parliament. According to this draft, these revenues should go in full to local budgets. We support this bill, and I think the government will support it, too.

Another task concerns ensuring the stability of regional funds for the financial support and co-funding of municipal entities. The federal procedure for determining the amount of allocations to the regions is based on the necessity of levelling out their development and narrowing the gap between the 10 richest and the 10 poorest regions. So we have a ready mechanism for setting the amount.

At the regional level there is no mechanism for determining how the funding for local budgets should be levelled out. That is why we propose including such a mechanism through an amendment to the Budget Code. We have prepared our proposals, which envisage a shift to programme-based budgeting, and we will submit them to the State Duma for the second reading. They are currently with the government.

To ensure the stability of regional funds we also propose mandatory three-year budgeting by the regions and, correspondingly, three-year planning for regional transfers to local budgets – just what the federal budget envisages for regional budgets. We propose to apply the same arrangement to the regions. We also propose making a list of priority areas for municipal co-funding from subsidies out of regional budgets analogous to the federal arrangement. We have also drawn up these rules and will submit them to the Budget Code.

And finally there is the introduction of differentiated monitoring of local government bodies carrying out their budgetary and financial obligations depending on the share of allocations in their revenues and the tools for rewarding local government bodies for increasing local taxation and the economic potential of the area.

There are two aspects here. The first is about the areas that are entitled to the allocations. The amount of limitations applied to regions and cities depends on the share of allocations in their revenues. Today, we are discussing municipal entities, so we think it is necessary to change the procedure of determining the amount of their allocations – I mean that regions may transfer tax revenues to local budgets. In this instance, there is only one source of such revenues – personal income tax. Allocations to local budgets will not go down when these revenues are transferred.

We propose to create a written rule according to which, when a municipal council agrees to replace the transfers by private income tax revenues, these revenues will be excluded from the calculation of their share of subsidies. This will provide an incentive to local government bodies to cut allocations, improve tax collection, and promote businesses so as to increase tax revenues. We think this is absolutely correct.

We also propose creating a mechanism in the regions for rewarding local governments for building up their tax potential. In fact, this rule will repeat an existing law that applies to the regions. We will draw up the relevant proposal. Thank you.

Vladimir Putin: Thank you. Mr Borisov, please.

Sergei Borisov: Mr Putin, this is a matter of vital importance to us small businessmen. We raised this issue during the election campaign, and you agreed with it, this new rule, so it should come as no surprise now. Mr Siluanov said that all patent tax revenues will go to the municipal budgets, while the report of this meeting mentions only 90%. Is that a mistake or a slip of the tongue on Mr Siluanov’s part?  That’s my first point.

Vladimir Putin: Let’s ask him at once. Mr Siluanov, please.

Anton Siluanov: At present we intend to transfer to local budgets the sums that go to the regional budgets. That’s what I meant.

Sergei Borisov: No, patent tax revenues went entirely to the regional purse.

Anton Siluanov: That’s just what I said.

Sergei Borisov: All 100%?

Anton Siluanov: Yes, 100%.

Sergei Borisov: I see. So it isn’t the 90% mentioned in the report.

Vladimir Putin: Not 90%?

Anton Siluanov: No, we will pass on all the revenues.

Sergei Borisov: So it was a mistake. I have another question. Simplified taxation is omitted here though it concerns 36-38% of small businesses. Is this also a mistake or what? The regions are using simplified taxation again. It means businesses pay 6% of profits or 15% of the difference between revenues and expenditure. That is also very important.

Anton Siluanov: This is not an error, because revenues from simplified taxation are substantial for Russian regional budgets. This regional budgetary income roughly totals 200 billion roubles. And if we mean to provide such a large earning capacity to local budgets without also providing relevant powers, it may create an imbalance in the regional budgets. Therefore, we do not at this point suggest providing local budgets with such a source of income.

Sergei Borisov: Mr Putin, we cannot agree with this, because this is a matter of basic principle. In this case, most businessmen will adopt the simplified tax system, while the single imputed income tax will quietly come to an end by 2018. And we cannot foresee the future of the tax, to which 50% of small business owners are currently subject. However, it is extremely important for us because the single imputed income tax applies mostly to legal entities, and patent taxation is for natural persons or individual entrepreneurs. Actually, we deprive municipalities of motivation for developing small businesses there.

Vladimir Putin: What do you propose?

Sergei Borisov: I propose shifting the simplified tax system completely to local budgets.

Vladimir Putin: Mr. Borisov, I have nothing against this, but I have to come back to what the Finance Minister has said: we will take the 200 billion plus roubles, which go to the regional budgets, but will leave them the powers. Then we will cut off the power from the regions, like we have with the municipalities. This is why I agree with Mr Siluanov’s logic: if we give them such a huge amount of money, then we need to give them the obligations to exercise certain powers, but this simply requires some additional considerations and nothing else. And I have nothing against it in general. Yes, go ahead.

Viktor Basargin: I can comment on the proposal in general because, jointly with the Finance Ministry, we prepared and involved both the local government and regional authorities in the discussion. To clear things up… I mean we are enhancing the municipalities’ financial independence and I would like to describe the local budgets’ revenue structure in 2011. The income of local government authorities, that is, the income from local taxes and non-tax revenues, totals as little as 390 billion roubles. Of this amount local taxes account for 111 billion and 279 billion comes from property, management, privatisation, etc. As for inter-budgetary transfers, 1.798 trillion roubles were remitted to the local budgets plus deductions from federal and regional taxes amounting to 772 billion roubles. The total amount is 2.961 trillion roubles, excluding Moscow and St Petersburg...

Vladimir Putin: Municipalities receive two trillion...

Viktor Basargin: ...2.961 trillion roubles.

Vladimir Putin: And only 300 billion of this amount is their own?

Viktor Basargin: Yes, 300 billion is theirs, that is, the rest of the amount either consists of transfers or deductions from regional or federal taxes.

Now – proposals. I will tell you right away: we support all of these proposals, but I want to indicate what their role is in strengthening the local government’s financial basis and independence. As for the redistribution of revenue from the taxation of small and medium-sized businesses, I tend to agree more with our colleagues responsible for small business. We transfer funds… When we had a simplified tax system all these funds were paid into the regional budget. Their total amount was 108 billion roubles. We had a single imputed income tax totalling 68 billion roubles, which we paid in full to the local budgets. Now we are about to replace the single imputed income tax with the patent tax system. However, as our colleagues say, we make a distinction: legal entities will be subject to the simplified tax system and individuals will remain under patent taxation. Even if we assume 100% (although initially the breakdown was: 90% to the local budget and 10% to the regional budget), even if we suppose that the patent system is adopted 100% by the local budgets, the local budgets will lose about 30 billion roubles, because the ratio between entities and individuals is 60:40, which means 40% will be subject to the simplified tax system, and the patent system will apply to...

Vladimir Putin: I understand. In general, you think that the balance is such that we should listen to what Mr Borisov has said?

Viktor Basargin: Yes, but we do not suggest giving 100%. We agree that this will really stimulate the municipalities to support business activities at least 50:50.

Vladimir Putin: All right. Let's do it.

Anton Siluanov: Mr Putin, first with regard to the income structure. Mr Basargin said that 300 billion roubles accounts for income not including individuals’ income taxes, which are federal. Actually, municipalities' tax and non-tax income amounts to 1.158 trillion roubles. In general…

Vladimir Putin: There is a big difference between the 300 billion roubles I mentioned…

Anton Siluanov: I can say the following. This is because the main source for local budgets is individuals’ tax incomes (583.5 billion roubles), which are paid, according to standards, to local budgets and are the main source of income. This is the first point.  

Second: the single imputed income tax will be in effect until 2017 for sure. For this reason, there is no need to make decisions on transferring taxes under the simplified taxation system until 2017; there is no need to worry, because by that time we will be able to decide on a broader execution of obligations by local government bodies. Then we will have to examine some sources and decide about which resources to transfer. Perhaps by that time we will have to think about the sources of these transfers, sources of income for the local budgets to execute these expenditure commitments. And then we will move on to the issue on the partial transfer from the regional budgets, including incomes from the simplified procedure. Let’s deal with it in this way, since the transfer of incomes from one level of the budget system to another could eventually result in a weakening of the regions' budgets. Two hundred billion roubles is a major… 

Viktor Basargin: But this is a stimulating tax. Colleagues, those who work in local governments, bodies…

Anton Siluanov: Due to the need to move to an efficient contract, Russian constituent entities will be having more and more expenditure commitments. And this amounts to significant additional expenses, which is why every single kopeck will be worth its weight in gold. 

Vladimir Putin: Well, since there is no consensus, we will not be able to resolve the issue in this manner without the approval of the Finance Ministry, but I would like to ask both the Finance Ministry and the Regional Development Ministry, together with our business colleagues, particularly from OPORA Russia, to assess once again the amount of losses accumulated during different time periods, if any. And then we will decide on additional sources for municipalities.

Sergei Borisov: Mr Putin, but judging by the situation you described in your article, municipalities will have to appeal to constituent entities for money once again. 

Vladimir Putin: That is why I said that we need to make assessments. Let's calculate them.

Viktor Basargin: Mr Putin, may I finish just…

Vladimir Putin: What? On this issue?

Viktor Basargin: Yes.

Vladimir Putin: There's no need.

Viktor Basargin: I mean concerning the rest of the proposals that were mentioned.

Vladimir Putin: Go ahead.

Viktor Basargin: In terms of a unified agricultural tax, the total volume amounts to 1.1 billion roubles, which is approximately 0.5% of all local budget revenue, that’s why, taxes do not play a key role. The local property tax…

Remark: One billion?

Viktor Basargin: Yes, one billion. And some 30% was already transferred to budgets, and 38 constituent entities decided to transfer 100% of taxes to local governments, because we are not extending the financial base.

As for the local property tax, we predict that probably… The tax can really strengthen the local governments’ financial bases, if it increases by 50%-100% as we predicted. Even if land and property taxes are united, the financial base still might not increase in the next year or two. 

Here are two solutions that, in our view, could yield substantial results. First is the optimisation of federal benefits on local taxes which include not only security facilities and land plots that are no longer usable, but also transportation, communications and utilities lines. But, Mr Putin, you issued an instruction in this regard yesterday, so roughly speaking, we need to assess how much to transfer from one pocket into another, we will need to assess what financial load our grid companies will bear and what load our federal budget will have to carry as well. This is why we need to make all necessary calculations and assessments together with the Finance Ministry and, maybe, implement all of these proposals on a step-by-step basis.

And secondly, receipt of fines for landscaping violations. The total amount of fines was 7.8 billion roubles, and if we isolate this component, then we get about 1.5-2 billion roubles. This will also be not enough to strengthen local governments’ financial bases. That is why I say that we should support all of these, but we should prioritise the elimination of benefits. But we still propose considering the redistribution of income taxes – to transfer part of income taxes to local governments. This might solve the issue we have been discussing today.

Anton Siluanov: Well this can actually result in an even sharper division of districts and local governments, as well as local budgets, in terms of their tax potential – because there are rural settlements with no industry at all where there isn't anything besides land taxes and, maybe, income taxes in small settlements. But there are also large districts, large urban centres with much higher tax revenue; different categories of local governments differ widely. If we introduce income taxes there, this distinction will grow even more, because in the urban areas and large districts with the highest personal income tax and property tax… If we introduce income taxes there, the budget capacity as well as the differentiation will skyrocket. This is why income taxes are distributed in income sources so unevenly, because they must not be transferred to local governments. This must not happen!

Viktor Basargin: Different kinds of activity may be considered.

Vladimir Putin: Yes they may. So, according to the Finance Ministry’s logic, if a tax enters a higher level of the tax system, it can be redistributed between the municipalities in need – this is how I understand it. Let’s have a look at this. This is what we will do: everything that the Finance Ministry spoke of and that you agree with will be entered into normative documents; and the rest, which is subject to dispute, should be additionally discussed. And besides the two or three of you will come later and report so as not to waste the time of those present. Yes, Boris, please.

Boris Titov: As for the redistribution in municipalities, nothing has been said about this, but currently the personal income tax is paid at the place of work. But this tax should of course be applied at the place of residence.

Vladimir Putin: Boris, we have discussed this issue a number of times. Right now, it is being worked out at the Finance Ministry and the tax service. The problem is that some of our colleagues believe that this will eventually hinder the development of the economy. Why? Because in that case, municipalities will be talking heads of enterprises into employing only those who live right where the enterprise is located. I do not think it should be done in this way. I think that instead, we should be thinking about the way the taxes have been collected until recently, at the place of work, and then we should redistribute it at the place of residence. But all of this is being discussed right now, we are thinking about it. What else? Please.  

Oleg Fomichyov: Just a few words from the Economic Development Ministry, because we have been actively involved in the process as well. As for the simplified system, we believe that we need to work with calculations under accrual interests, because right now we are saying 100% here or 100% there. Frankly, there is a host of interim splitting options that would create necessary stimuli under the simplified taxation system for the regions and would provide municipalities with the necessary base. And we support the personal income tax concept proposed by Mr Titov, but we believe that we could work it through in one or two regions, because there are a great deal of tax administration issues, quite problematic ones, it should be said.

Vladimir Putin: Well done, everyone. Carry on with your discussions. Come with the final version as soon as you agree on everything. If you fail to reach an agreement, then I will invite you after a while. What do you think, how long will it take to discuss the personal income tax issue? 

Anton Siluanov: Actually, it has already been discussed. We are ready to get down to work once again this month and report to you.

Vladimir Putin: Agreed, then. We will come back to the issue once again within the month. So the discussion will be on the agenda. I believe that we have discussed every issue. Is there anything to add? No. I would like to thank you. I request that everything we have discussed today be entered into draft documents. Thank you.