At an expanded meeting of the Government chaired by Head of State Kassym-Jomart Tokayev, Prime Minister Olzhas Bektenov made a number of proposals aimed at improving the tax and budget system and promoting economic growth.
The Prime Minister noted that despite some positive results, the current pace of economic growth is slow. In order to fully realize the country's industrial potential and increase the number of promising projects, it is necessary to generate significant investment capital. However, this is hindered by the insufficient volume of the "development budget": in developed countries it reaches 25% of all state expenditures, in Kazakhstan - 8%. Today, only 2 trillion tenge of the republican budget of about 26 trillion tenge is spent on development. The rest is the current budget, a significant part of which is social spending.
As a result, insufficient funds are allocated to the sectors of electric and thermal power, water management, gas transportation systems, roads, engineering networks and infrastructure, which are the basis of economic development. Development institutions are also not fully funded. In such a situation, it is very difficult to ensure a stable high rate of GDP growth.
In this regard, it is necessary to implement comprehensive measures to improve the tax and budget system. The current tax system cannot provide the state with the necessary amount of investment, and it is also becoming an unfair tax system for entrepreneurs. The main tax burden falls on the payroll fund, that is, on the cost of goods. The entrepreneur is forced to pay a significant part of the tax before the goods hit the shelves.
To change the current situation, the Government supports the redistribution of taxes from wages to sales. To do this, it is necessary to increase the VAT rate while simultaneously reducing social tax and mandatory pension payments of the employer. This will increase the competitiveness of domestic enterprises and pave the way for the formation of the necessary financial resources for them. Reducing the burden on the payroll fund will allow businesses to increase the salaries of employees. Additional tax revenues will be directed to stimulate economic growth, advance infrastructure development, and support promising business projects in priority sectors. National Fund funds will be requested only for the construction of large infrastructure projects.
At the same time, the efficiency of state spending will be increased and budget discipline will be strengthened.
Subsidy costs are growing steadily in all sectors. Moreover, their real impact is not taken into account and control by state bodies is weak. Receiving subsidies has become part of the business model of some companies. Over the past 3 years, the estimated cost of 770 projects has increased by a total of 2.2 trillion tenge. Of course, along with its objective aspects, there are also dubious aspects.
More than half of the republican and local budget expenditures - more than 18 trillion tenge - are directed to the social sphere. And there are big questions about the effectiveness of these expenditures. 9 central and all local executive bodies are administrators of social expenditures. This leads to fragmentation of these expenditures and loosening of control over them.
With the use of digital tools, control over budget funds spent on social purposes has been strengthened. In the pilot mode, an open digital mechanism for financing kindergartens has been introduced in the cities of Taraz, Shymkent, Turkestan and Uralsk. This will allow saving more than 20 billion tenge in 4 cities alone by eliminating false information. This practice is currently being introduced in the capital, and will be extended to the entire country by the end of this year.
The “Social Wallet” is also becoming a tool for strengthening targeted state support. It has begun to pay for children's meals and medicines for those in need. In order to strengthen control, the labeling of free medicines has been completed.
In the pilot mode, a “digital tenge” with the “money coloring” functionality has been introduced. It allows you to control the entire chain of expenses up to the final recipient. Current state expenditures have been reduced by a total of 410 billion tenge.
"We will intensify efforts to increase the efficiency of state spending based on the principle of "budgetary expenditures - primarily for economic development, social support - only for those in need." Economic growth should be accompanied by intensive investment in infrastructure. However, excessive state regulation of prices in large sectors of the economy complicates this task and reduces investment potential. The government has begun a phased liberalization of prices for fuels and lubricants and gas, as well as tariffs in the housing and communal services and rail transport sectors. A gradual transition to a market pricing policy will allow us to attract the necessary investments in these sectors and prevent fuel shortages. We will not allow a sharp increase in prices.I would like to emphasize this. The adoption of the above measures will ensure the necessary growth rate and allow for structural changes in the economy," Olzhas Bektenov concluded.
Source: Official information resource of the Prime Minister of the Republic of Kazakhstan
The government has proposed a set of measures to improve the tax and budget system - Official information resource of the Prime Minister of the Republic of Kazakhstan

Source : https://www.gov.kz/memleket/entities/zhetysu-oblysy/press/news/details/925971