To: The Government of Russian Federation
to the Chairman of the Government of RF,
Mr. Fradkov M.E.
#2,bldg 2 Krasnopresnenskaya emb., Moscow, Russian Federation, 103274
Declarant: Skoptsov Vladislav Vladimirovitch
Birth date: 09.25.1950,
birth place: city Petropavlovsk-Kamchatski
tel: 812 9741367
Post: 11 Romenskaya Street, apt.35, St.Petersburg, Russian Federation, 191119

STATEMENT

If a provision "including 18% VAT", which is included into retail prices ($150 billions), will be transferred into state budget instead of the accounts of retailers, the budget of Russian Federation will get extra $150 billions, and retail prices will not change.


Dear Mikhail Efimovitch!

I respectfully request, in accordance with the articles 13, 36 of the Federal law "On the Government of Russian Federation":
• To realize legislative powers granted to the Government of Russian Federation;
• To submit to State Duma a bill “On the alterations, addition and cancellation of laws and other regulatory acts with the purpose of elimination of the infringements of the Constitution of RF, Tax Code of RF, Civil Code of RF, valuable interests of Russian Federation, mine own valuable interests and valuable interests of unspecified persons (the purchasers of retail goods at the territory of Russian Federation).

As a rationale for my proposal, I inform you that:
Given the retail turnover of $1 trillion (which approximates the situation in RF) Russian citizens gratuitously assign to retailers more than $150 billions each year. It follows that an average money loss of a Russian citizen (including infants)is about $1000 a year.

ILLEGALITY OF THE TRANSFER
According to the paragraph 143 of the Tax Code of RF (Taxpayers), "taxpayers of the value added tax (referred below as “taxpayers”) are:
1. organizations;
2. individual entrepreneurs;
3. persons, acknowledged as taxpayers of the value added tax (referred below as “tax”) in connection with migration of goods across the custom border of Russian Federation, defined in accordance with the Customs Laws of Russian Federation.
This means that only aforementioned persons have rights and obligations related to the payment of value-added tax.
Nevertheless in accordance with part 6, article 168 of the Tax Code of RF (The amount of tax charge by a seller on a buyer), "in a case of the realization of goods (jobs, services) to population by retail prices (tariffs) related amount of tax is included into aforementioned prices (tariffs). The amount of tax should not be indicated at the price tags of the goods exhibited by seller and at the price tags and other receipt handed to purchases".
Hence natural persons (population) not mentioned in the article 143 of the Tax Code of RF, i.e. NOT STATED DIRECTLY IN THE LAW, are illegally required to transfer aforementioned “amount of tax” to the ownership of "sellers".

ECONOMIC RATIONALE
It is obvious that prices for all goods and services, including provided by state are inevitably included into retail prices for goods and services exported to the markets outside RF, independent of volition and desires of any individuals, groups of individuals and the state per se.
Hence, retail prices of goods (jobs, services) according to objective pricing laws already include amounts of tax (including VAT), collections, tariffs etc., which at the moment of selling and purchaising are already paid by producers of goods (jobs, services) and are reimbursed in full amount. The final compensation of expenditures of a retailer happens at the moment of retail selling-purchasing.
In reality aforementioned price markup named "including 18% VAT" becomes a complete property of a retailer and later is transferred to the ownership of the other participants of a process of production of goods and services proportionally to their participation in the production of a specific unit of a retail good (job, service).
The largest share of this “gift” is obtained by the producers, who have the maximal profitability (trade markup).
According to the part 1, article 8 of the Tax Code of RF part I (The Notion of Tax and Collection), "a tax is defined as an obligatory and individually gratuitous payment by organization and natural persons in the form of amortization of money, which are owned, managed or appropriated by them with the purpose of financing the activities of the state and (or) municipal organs”.
But it is easy to prove that aforementioned markup to the price of goods named "including 18% VAT", which total amount is $150 billions a year, could not be considered as taxable "with the purpose of financing of the activities of the state".
Indeed, obvious direction of the transfer of the aforementioned markup to a price of good is to a retailer. That is a retailer to whom a retail buyer pays this markup. However, it is possible that a retail seller later transfers the aforementioned markup down by a good production and selling chain and eventually the whole amount is transferred to its destination, which is the state budget???????
It does not happen in reality.
Firstly, even assuming that the producers of goods and services use this money specifically to pay VAT, which is every month transferred to the state budget as 18% difference between the amounts of price of goods and services sold and purchased, it appears that aforementioned amount is ten times less than $150 billions. The amount indicated above will equate exactly $150 billions, if all producers of goods and services used 100% trade markup (or on average producers of goods and services will be getting 100% trade markup).
Secondly, it appears that mentioned above $150 billions have no relation to the amount of VAT, which is really transferred to the state budget by producers of goods and services.
THE PROVE: If instead of assigning $150 billions to retailers this amount will be transferred into the state budget, the latter obviously will get an extra $150 billions and retail prices will not change.
This paradox (budget increase does not course price increase) irrefutably proves that aforementioned amount in fact is not a tax, but it is and object of the off-budget transfer among private individuals: retail buyers and retail sellers (and then is transferred to producers of goods and services).

Considering stated above,

I REQUEST:
To submit to State Duma as a legislative initiative a bill “On the alterations of Value Added Tax collection”, specifically:

1. unconditionally exclude gratuitous transfer of the amount stipulated by a provision "including 18% VAT" to retailers;
2. unconditionally transfer aforementioned amount into state budget at the moment of retail transaction of selling and buying;
As relates to the operating system of administration of the aforementioned VAT tax, there will be no obstacles for collecting the same amount of VAT using the same procedure, if the increase of prices by 18% discussed above will become VIRTUAL instead of REAL down the whole chain of producers and providers of goods and services.

CONCLUSIONS:
1. There is an opportunity to increase Federal budget by without any negative consequences for the population of RF.
2. This will eliminate the infringement of the rights of property of the citizens of RF totaling $150 billions.
3. The providers of goods and services will get an opportunity to decrease their expenses on a unit of production by 15.25% or by $150 billions.
4. The fundamental source of inflation - "including 18% VAT" provision, related to money, which is not based on real goods and services will be eliminated.

Declarant: Skoptsov V.V.
July 16, 2007