Russia cannot afford to cut the nation's payroll tax from the current 30 percent, President Dmitry Medvedev said on Tuesday.
"We have no special resources to cut the payroll tax level," Medvedev told a government meeting. "We have fixed it at the current level for now," he said.
The government planned to cut the payroll tax, Russia's main tax for companies, after boosting it from 26 percent to 34 percent in 2011. The government had hoped the increase would bring in 700-800 billion rubles ($23.33-26.66 billion) to help finance a major increase in social spending beginning this year.
Experts claim the higher payroll tax made Russian products less competitive and led to an increase in wages paid under the table, resulting in a smaller revenue increase than the government expected in 2011.
The Finance Ministry considers the tax level of 30 percent should remain after 2014, while the Economic Development Ministry suggests cutting it to 28 percent.