The following issues are scheduled for discussion at the Government Presidium meeting on May 26, 2008:

1. The Tax Policy Guidelines for 2009 and the Planning Period of 2010 and 2011, and draft federal laws aimed at their implementation

In accordance with the medium term financial planning principles, the Finance Ministry developed for the first time in 2007 a document formulating the conceptual principles of tax policy in Russia for a three-year planning period between 2008 and 2010. The Ministry proposed to amend the tax laws in the area of administration, computation, and payment of certain taxes and dues in the period between 2008 and 2010. These amendments are reflected in the Guidelines for Tax Policy, approved by Government of the Russian Federation in March 2007.

The Government instructed the federal executive bodies to follow the Tax Policy Guidelines in budget planning for 2008 and in the period up to 2010. The above document should be followed in planning both the federal budget and the draft annual budgets for the constituent entities of the Russian Federation.

In addition to realising the budget planning objective, the three-year Tax Policy Guidelines allow all tax relations parties to formulate medium term tax goals, which results in increased stability and certainty of the economic activity in Russia.

Even though the Tax Policy Guidelines are not a normative (regulatory) act, the document still constitutes grounds for introducing amendments to the Law on Taxes and Dues, which should be drafted based on the norms stipulated in the document. This procedure provides for increased transparency and predictability of the government tax policy.

In the medium term, there are no plans for significant tax policy amendments that would be comparable to a fundamental reform of the tax system. However, it should be understood that social and economic reforms, as well as the integration of Russia into the world economy, will eventually require revisions in the tax laws. At present, not all objectives set in the course of the tax reform have been realised. Therefore, this segment of the legislation will be dynamically changing.

In the three-year period, the Government tax policy priorities remain the same as planned for the period between 2008 and 2010 - creating an effective and balanced tax and budget systems, and relinquishing the practice of unjustified tax increases.

As far as the tax rates are concerned and with due account of the planned amendments in the medium term, the tax policy objectives, formulated in the Tax Policy Guidelines for the previous planning period, remain unchanged. The following are the strategic objectives:

1.Maintain unchanged the nominal tax burden level in the medium term, provided the budget remains balanced. At the same time and with due account of the budget spending commitments and the planned increase of the budget's social orientation, as well as the changing foreign economic environment forecasts, the tax burden on economic agents could be decreased by means of a balanced decrease of tax rates and through redistribution of tax and administrative burden by means of structural reforms in the tax system - improving the quality of tax administration and ensuring neutrality and effectiveness of the main taxes.

2.Harmonise tax rates, increase effectiveness and neutrality of the tax system through modern approaches to tax administration, optimisation of the existing tax benefits and exemptions, and integration of Russia's tax system into international tax relations.

The currently active tax laws in Russia have been written based on the highest international standards in the field of tax policy. Nevertheless, the effectiveness of Russia's tax system, even though consistent with the present level of the country's economic development, is far from perfect. The problems with the introduction in Russia of the tax policy instruments that are successfully implemented in many other countries are not due to the ineffectiveness of these instruments, but reflect the fact that the root cause of the problems is beyond the system of tax policy decision making.

To a certain degree, problems like that could be resolved through adaptation of the internationally accepted tax policy instruments to the current environment of Russian economy. The flat individual income tax rate can serve as a successful example of such adaptation. At the same time, an ineffective tax system is frequently due to insufficient effectiveness of the system of application and administration of the laws on taxes and dues, the judicial system, government agencies and the system of government as a whole. In the medium term, consistent measures will be taken to correct the aforementioned tax system shortcomings. These measures could only be effective, however, provided they are synchronised with socio-economic reforms in other spheres.

Therefore, the present Tax Policy Guidelines for 2009 and the Planning Period of 2010 and 2011 are drafted with due account of succession to the fundamental tasks and objectives formulated in the document establishing the tax reform strategy in the period between 2008 and 2010.

2. Measures on social protection of veterans and disabled persons

In accordance with the laws of the Russian Federation, the social protection of war veterans and the disabled falls under the jurisdiction of the federal Government, whereas the social protection of rear workers, labour veterans, and victims of political repressions falls under the jurisdiction of the constituent entities of the Russian Federation.

As of April 1, 2008, the number of veterans and disabled persons, whose social protection is provided by the federal Government, is 14.5 million people. The constituent entities of the Federation are providing social protection to 14.1 million people. Starting in 2005, most of the natural benefits to the above categories of citizens have been replaced by monthly monetary allowances.

In addition to their pensions, the federally supported veterans and the disabled starting April 1, 2008 are provided with monthly monetary allowances totalling between 671 roubles (for the disabled without working ability restrictions) and 2,638 roubles (for the disabled war veterans)

Furthermore, in accordance with Decree of the President of the Russian Federation of March 30, 2005 No. 363, war veterans have been granted an additional monthly allowance totalling between 500 and 1,000 roubles.

The socially protected citizens whose benefits are provided by the regions receive monthly monetary allowances from regional budgets. Regions are provided with subsidies from the federal budget (14.6 billion roubles in 2007).

The federally supported social beneficiaries may choose to convert a portion of their monetary allowance into a package of social services, including provision of medicines; health-resort treatments; roundtrip fare to the treatment site; commuter train fare.

The number of beneficiaries receiving the social services package has decreased by 1.3 times since 2006 and currently stands at 6.3 million people, including the 5.5 million disabled and veterans receiving medicinal provisions.

The regions of the Federation have been given the authority to organise the provision of necessary medications. Subventions amounting to 27.6 billion roubles have been allocated from the federal budget for these purposes in 2008. Prescriptions are funded at 98.7%.

Starting in 2008, the federal budget has allocated 33 billion roubles to cover the cost of expensive medicines for 46,000 people, suffering from illnesses and having undergone organ and tissue transplants, requiring expensive medications (on average 75,000 roubles per prescription).

The federally supported veterans and the disabled receive assistance with coverage of their housing and utility bills. In 2008, the federal budget has allocated for these purposes 89.9 billion roubles, which corresponds to 5,300 roubles a year per person. In accordance with Decree of the President of February 23, 2007 No. Pr-294, the government agencies of the constituent entities of the Russian Federation shall transition to providing housing and utility services benefits in the form of monetary allowances. Fourteen regions have already implemented the transition, including the Republic of Buryatia, the Republic of Tatarstan, the Republic of Tyva, and the Kaliningrad and Leningrad regions.

Seventy regions provide subsidies for low income veterans and the disabled to help cover housing and utility payments.

To assist the regions in the provision of housing and utility subsidies, the federal Government has earmarked 11.3 billion roubles in 2008, 11.7 billion roubles in 2009, and 12.1 billion roubles in 2010.

In accordance with Decree of the President of May 7, 2008 No 714, the disabled and veterans of World War II who registered to receive new housing before March 1, 2005, shall be provided with apartments by May 1, 2010. Their number exceeds 55,000 people.

The Ministry of Regional Development estimates that 29 billion roubles will be required for this purpose in 2009 and 7.2 billion roubles in 2010.

Medical services for war veterans are provided by 66 veterans' hospitals and 83 specialised hospital departments. Last year, 310,000 war veterans and the disabled were treated in these facilities.

Annually, 84% of World War II veterans and 94% of the disabled undergo comprehensive medical examinations. In 2007, 92% of veterans and 94% of the disabled were treated as in-patients.

Five million people underwent a medical and social assessment in 2007 (6.4 million - in 2006); 3.9 million people were given a disability status (1.2 million - first-time disabled). Those with re-confirmed disability were furnished with individual rehabilitation programmes.

To avoid excessive paperwork for disability status recertification, the Rules for Disability Certification have been amended (Government Resolution No. 247, April 7, 2008) to identify a list of illnesses and requirements, establishing an individual's eligibility for a permanent disability status.

In 2007, the disabled were provided with 73 million rehabilitation devices (49% more than in 2006) amounting to 7.6 billion roubles (38% more than in 2006). In 2008, 8.9 billion roubles will be allocated for these purposes. The share of modern prostheses has increased from 40% in 2005 to 70% in 2007.

To facilitate the process of furnishing the veterans and the disabled with technical devices, the Government has adopted Resolution of April 7, 2008 No 240 On The Procedure for Provision of Rehabilitation Devices for the Disabled and Provision of Prostheses (except dental prostheses) and Prosthetic and Orthopaedic Appliances for Certain Categories of Veterans. Decree of the President of May 6, 2008 No 685 has set the task to provide the disabled with automobiles or to pay them a simultaneous monetary compensation in the amount of 100,000 roubles in 2008 and 2009. The disabled veterans shall be provided with vehicles already in 2008.

New technologies of medical, social, and professional rehabilitation, including new types of rehabilitation equipment conforming to international standards, are being developed in the framework of the federal targeted programmes Social Support to the Disabled in the Period of 2006-2010 and Children of Russia in 2007-2010 (under the programme Families with Disabled Children).

The system of social services for disabled children is growing; currently it includes 294 rehabilitation centres (compared with 33 in 1994) and over 600 rehabilitation departments within the social service facilities for families, children, and children's boarding houses (compared to 38 in 1994).

For the ten-year period, more than 930,000 disabled children and over 720,000 families with disabled children have undergone rehabilitation, and received consultations and necessary social assistance in the children's rehabilitation centres.

Within the framework of the high priority national Health programme, a neonatal screening is being conducted, ensuring early detection of hereditary and inborn diseases among children. In 2007, 6.8 million children were screened for 5 hereditary diseases, and 875 cases were detected.

Thirty one thousand children (17.7% of all sick children) received high-tech medical support at the federal and regional medical facilities in 2007 (compared with 23,000 - in 2005).

3. Introducing amendments to certain legislative acts of the Russian Federation to increase some social benefit payments and the value of the social services package

4. Submission to the President for further ratification of the Agreement between the Russian Federation and the Republic of Belarus on Providing Equal Rights to Citizens of the Russian Federation and the Republic of Belarus for Freedom of Movement, Choice of Stay and Residence in the Territory of Member-States of the Union

The draft Federal Law On the Ratification of the Agreement between the Russian Federation and the Republic of Belarus on Providing Equal Rights to Citizens of the Russian Federation and the Republic of Belarus for Freedom of Movement, Choice of Stay and Residence in the Territory of Member-States of the Union has been prepared in execution of the Schedule of Activities to ensure equal rights to citizens of the Russian Federation and the Republic of Belarus for freedom of movement, choice of stay and residence in the territory of member-states of the Union.

The Agreement between the Russian Federation and the Republic of Belarus on Providing Equal Rights to Citizens of the Russian Federation and the Republic of Belarus for Freedom of Movement, Choice of Stay and Residence in the Territory of Member-States of the Union, signed by the President of the Russian Federation and the Republic if Belarus in accordance with Article 15.1 of the Federal Law On International Treaties of the Russian Federation, is subject to ratification as it is establishing rules different from those stipulated in the laws of the Russian Federation on granting additional rights and freedoms.

In particular, the Agreement stipulates the right for free arrival and departure, the right for citizens of one Party to stay in the territory of the other Party using valid documents and without a migration card. At the same time citizens of the Parties are not required to register at the place of their stay for 30 days from the day of their arrival in the territory of the other Party.

In addition, holding the citizenship of one Party allows the individual, in accordance with the Agreement, to apply for a residence permit without a limit for temporary residence and to receive a permit for temporary residence in the territory of the other Party.

The coming into effect of the Agreement will contribute to the formation of a single migration space, which is impossible under the existing rules and procedures, regulating the right for free movement, choice of stay and residence.

5. Clarification of the functions of the federal executive bodies in accordance with Decree by the President The System and Structure of the Federal Executive Bodies of May 12, 2008 No. 724

In accordance with the Government Regulations, the draft Government resolutions, clarifying the federal executive bodies' functions and prepared materials based on established procedure have been considered.

The draft resolutions approve provisions on the Ministry of Sports, Tourism, and Youth Policy, Ministry of Communications, Ministry of Culture, Ministry of Natural Resources and the Environment, Ministry of Industry and Trade, Ministry of Energy, Ministry of Economic Development, Ministry of Agriculture, Ministry of Health and Social Development, Ministry of Regional Development, Ministry of Transport, as well as make amendments in other Government acts on the activity of federal agencies and services under the jurisdiction of federal ministries.

The draft resolutions have been considered at the Government's Staff and discussed at the meeting of the Government Committee on Administrative Reform. The positions of the ministries and agencies regarding their functions and powers have been agreed, the personnel numbers in their administrations and territorial branches of the federal executive bodies have been clarified. The draft resolutions have been prepared in accordance with the established procedure and agreed with the Finance Ministry; they have received a positive assessment from the Ministry of Justice.

May 24, 2008
Moscow

* The content of the Press Service and Information Department press-releases represents a description of the materials, provided by the federal executive bodies for consideration at the meeting of the Government.