Transcript of Russia President speech where he explains why his policy is important :

Dear Colleagues,

Let me now share some specifics on our objectives. I will begin with the key objective of preserving our nation, which means providing all-around support to families.

Family, childbirth, procreation and respect for the elderly have always served as a powerful moral framework for Russia.

We have been doing everything in our power to strengthen family values and are committed to doing so in the future.

In fact, our future is at stake.

This is a task shared by the state, civil society, religious organisations, political parties and the media.

Russia has entered an extremely challenging period in terms of demographics. As you know, the birth rate is declining.

As I have already said, this is caused by purely objective reasons,

which have to do with the immense human losses and birth dearth experienced by our country in the 20th century, during the Great Patriotic War

and the dramatic years following the dissolution of the Soviet Union.

This does not mean, however, that we must accept this situation or come to terms with it. Definitely, not.

We succeeded in overcoming the negative demographic trends in the early 2000s, when our country faced extreme challenges.

This seemed to be an impossible challenge at the time. Nevertheless, we succeeded, and I strongly believe that we can do it again by returning to natural population growth by late 2023 – early 2024.

Today, I wanted to talk about a new package of measures that has already been prepared to support families.

First, it is important that having children and bringing them up do not put families at the risk of poverty or undermine their wellbeing.

As you know, we have already provided for the payment of subsidies for the first two children until they reach 18 months.

Benefits for the first child are paid from the federal budget, and families can use the maternity capital subsidy for obtaining benefits for their second child.

The size of the subsidy depends on the regional subsistence level for a child.

It may vary from 8,000 rubles in Belgorod Region, for example, to 22,000 rubles in Chukotka Autonomous Area, with the national average of over 11,000 rubles a month per child.

Currently these allocations are reserved to families whose income does not exceed the subsistence wage multiplied by 1.5 per person.

It is time that we make the next step.

Starting January 1, 2020, I propose raising the bar to two subsistence wages per family member.

This is what people have requested and these requests come directly into the Executive Office. This measure will increase the number of families entitled to additional benefits by almost 50 percent.

Some 70 percent of families with one or two children will be able to benefit from help from the Government.

Second. At present, care-takers looking after children with disabilities and people disabled since childhood receive an allowance of only 5,500 rubles.

I suggest increasing this to 10,000 rubles, starting July 1. Of course, I understand that it is still a small amount.

However, it will be an additional measure of support for families with a child who needs special care.

Third. The income of Russian families must, of course, increase. This is a serious task that requires a comprehensive solution.

I will speak about this in greater detail later. But we need direct measures. First of all, the tax burden on families needs to be relieved.

The approach should be very simple: the more children there are, the lower the tax.

I propose increasing federal tax relief on real estate for families with many children.

I also propose lifting taxes on 5 square metres in a flat and 7 square metres in a house per each child.

What does this mean? If, for example, right now, 20 square metres in a flat are not subject to tax, the new measure will mean that for a family with three children, an extra 15 square metres will not be subject to tax.

Regarding plots of land that belong to families with many children, I propose that 600 square metres should be exempt from tax, and this means most plots of land will be free from taxation.

Let me remind you that this benefit is already available to pensioners and people of pre-retirement age.

Of course, in many Russian regions there are local tax benefits on land and property for large families. However, the benefit being imposed at the federal level guarantees that it will be available everywhere in the country.

I want to ask regional officials to propose additional tax measures to support families with children.

Fourth, the Government and the Central Bank need to consistently maintain the policy to lower mortgage rates to 9 percent,

and then to 8 percent or below, as stipulated in the May 2018 Executive Order.

At the same time, special measures of support should be provided for families with children, of course.

As a reminder, last year, a preferential mortgage programme was launched for families that have had their second or subsequent child.

The rate for them is 6 percent. Anything higher is subsidised by the state. However, only 4,500 families have used the benefit.

The question is why. It means that people are somehow dissatisfied with the proposed conditions.

But it is also clear why. A family making a decision to buy housing certainly makes plans for a long or at least medium term, a lasting investment.

But with this programme, they take out a loan, start paying the instalments, and the grace period ends. The interest is actually subsidised only for the first 3 or 5 years.

I propose extending the benefit for the entire term of the mortgage loan.

Yes, of course, it will require additional funding, and the cost will be rather high: 7.6 billion rubles in 2019, 21.7 billion rubles in 2020, and 30.6 billion rubles in 2021.

But the programme is estimated to reach as many as 600,000 families. We certainly need to find the money.

We know where to get it. We have it, and we just need to use it in the areas that are of major importance to us.

And one more direct action solution.

Considering the sustainability and stability of the macroeconomic situation in the country and the growth of the state’s revenues,

I consider it possible to introduce another measure of support for families having a third and subsequent children.

I suggest paying 450,000 rubles directly from the federal budget to cover this sum from their mortgage.

Importantly, I propose backdating this payment starting January 1, 2019, recalculating it and allocating relevant sums in this year’s budget.

Let us see what we have.

If we add this sum to the maternity capital, which can also be used for mortgage payments, we will get over 900,000 rubles.

In many regions, this is a substantial part of the cost of a flat.

I would like to draw the attention of the Government and the State Duma to this issue. If need be, the budget will have to be adjusted accordingly.

An additional 26.2 billion rubles will be required for this in 2019. The relevant figures for 2020 and 2021 are 28.6 billion rubles and 30.1 billion rubles, respectively.

These are huge funds but they should be allocated and used in what I have already described as a very important area.

It is necessary to give families an opportunity not only to buy ready-made housing but also to build their own housing on their land.

I would like to ask the Government to draft in cooperation with the Central Bank convenient and,

most importantly, affordable financial instruments for supporting private housing construction because it is not covered by mortgage loans today.

And, last but not least, the tax on land must be fair.

Obviously, the cadastral or market value of a land plot can change but tax rates must not go up and down unpredictably like roller coaster rides.

We have already limited to 10 percent the annual growth of the tax rates for residential property.

I suggest establishing the same limit for land plots.

Moving on, today, when construction companies build social facilities and transfer them to the state or municipalities, they have to pay profit tax and VAT.

We need to relieve construction companies of this burden (including our innovations in the construction sector).

This will serve as an impetus for the comprehensive development of cities and townships, ensuring that families have everything they need near their homes: clinics, schools and sports facilities.

By doing this, we will enable parents to work, study, live happily and enjoy parenthood.

We have come close to guaranteeing universal access to kindergartens,

but by the end of 2021, we will have to resolve the problem with nurseries by enabling them to accept 270,000 more children, including in the private sector, with 90,000 places to be created as early as this year.

The federal and regional budgets should allocate 147 billion rubles for this purpose, over a three-year period.

Let me add that enrolling in a nursery group, kindergarten, getting subsidies, benefits or the tax deductions that I have already mentioned

and, I hope, that we will come up with, together with you, all this should happen without any additional applications, excessive paperwork or having to visit various social services.

By the end of 2020, all the key government services must be provided in a proactive format where a person will only need to send in a request for a service that he or she needs, and the system will take care of all the rest independently and automatically.

I would like to emphasise that the package of measures to support families proposed today is not an exhaustive list of initiatives.

It sets the priorities. Considering the challenges posed by the state of Russia’s demographics, we will continue to channel more and more resources into this area.

I ask all of you, colleagues, including both the Government and the Federal Assembly, to think about it and suggest solutions.

Courtesy: Russia Insider

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