Yesterday the State Duma in the third and final reading passed a bill increasing the rate of Value Added Tax from 18% to 20%. The increase will be effective starting from January 1, 2019. At the same time, Russian government is planning to keep the current reduced VAT rates (10% and 0%) for socially important goods and services.
Thus, by the end of 2019 the budget will receive an additional RUB 620 bln, which will be used to implement President Putin’s spending plan....Awara
Russia Passes Law Raising VAT to 20%
Awara Group
5 comments:
“By the end of 2019 the budget will receive an additional RUB 620 bln, which will be used to implement President Putin’s spending plan....”
Nonsense. The Russian government is monetarily sovereign, and therefore can create infinite rubles out of thin air. Therefore the Russian government does not need any tax revenue in order to “implement a spending plan.”
The article says there will be no VAT tax increase on “socially important goods and services.” This suggests that the real purpose of the tax increase is to [1] reduce Russia’s dependence on imports, in order to moderate foreign debt.
Either that, or [2] the VAT tax increase will be used to moderate inflation.
he Russians may know more about MMT that we give them credit for. The central bank head certainly knows that she is the monopoly supplier the ruble and that Russia is a currency sovereign. She is the one that recommended floating it when the attack began. She has to navigate by looking at both inflation and adequacy of foreign reserves as long as Russia imports since no one accepts the ruble in exchange (no one wants to save in rubles). Inflation is under control, and Russian has successfully implemented import substitution and increased exports. They all realize that the US trying to strangle them economically with sanction and international isolation, so they have to be cagey and play their cards close to their chest. Russia also sold a tranche or two of Eurobonds to show that the country is not isolated economically by any means. Now the US is considering sanctioning Russian public debt to tighten the screws.
“The Russians may know more about MMT that we give them credit for.”
All monetarily sovereign governments know about MMT, but most pretend that they are revenue-constrained, in order to keep the peasants groveling for money. Seven billion people have been programmed to think of money as physical and scarce.
“The central bank head certainly knows that she is the monopoly supplier of the ruble and that Russia is a currency sovereign.”
The central bank does not supply the Russian government’s spending money. Instead, monetarily sovereign governments create their spending money (in their own currency) out of thin air by ordering various banks to credit accounts.
“Now the US is considering sanctioning Russian public debt to tighten the screws.”
That is, the U.S. government wants to to reduce the Russian government’s ability to borrow money in foreign currencies. This is done by punishing anyone who buys Russian treasury securities (aka Russian sovereign bonds). This will have little effect, since Russia has a $30 billion trade surplus, and therefore is not desperate for loans. Same with Iran.
However the Venezuelan government is vulnerable to U.S. economic attacks, as Venezuela has had a trade deficit since Oct 2014. This means that Venezuela is desperate for foreign currency loans.
The U.S. government calls Venezuela a "national security threat," and says that President Maduro is a "dictator" who is guilty of "human rights violations."
And the Americans peasants believe this nonsense.
Speaking of nonsense, the Russia-gate hoax has become so widespread that I'm surprised the U.S. government hasn't accused the Maduro government of conspiring with the Russian government to "hack" the DNC's computer.
The central bank does not supply the Russian government’s spending money. Instead, monetarily sovereign governments create their spending money (in their own currency) out of thin air by ordering various banks to credit accounts.
In the existing monetary system, national currencies are liabilities of the nation's central bank as the government's fiscal agent. Commercial banks can create deposits denominated in the currency but they do not create currency. They need to obtain cb liabilities as either settlement balances in their accounts at the cb or physical cash from the cb in exchange for settlement balances. The settlement balances in the payments system run by the cb are cb liabilities.
Governments accept only currency in the form of settlement balances or cash to settle obligations with the government. Thus banks must be able to convert customer deposits on their books into settlement balances at the central bank for settlement with the government. Only member banks have this privilege and banks that are not members much use a "correspondent" bank to do so.
If a government allowed commercial banks to actually create the currency ("printing press in the bank basement"), they would lose their monopoly on the currency.
they would lose their monopoly on the currency. Tom Hickey
Yes, but the banks have a monopoly on the USE of fiat, except for unsafe, inconvenient physical fiat, aka "cash."
One can almost hope for the complete abolition of physical fiat, aka "cash", so that those who defend bank privileges, including most MMT advocates, shall be put in the position of explaining why citizens may not use their Nation's fiat AT ALL but instead must work TOTALLY within a government privileged usury cartel.
Will those who ignored justice and equal protection under the law then feverently wish they hadn't?
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