Finance • 22 January, 2019

Reducing tax burden will allow 2 million citizens to receive additional income

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At the Government meeting chaired by Prime Minister Bakytzhan Sagintayev, the progress in the implementation of the President’s Five Social Initiatives was reviewed.

Chairman of the National Bank Daniyar Akishev reported on the implementation of the 7-20-25 Program. This program is aimed at improving the living conditions of Kazakhstanis. The terms of participation were approved in the middle of 2018. For the development of the mortgage market, legislative changes were introduced, a program operator, the Baspana organization, was created. The program was launched in July 2018. Eight banks participate in the program.

As of Jan. 17, 2019, 4,350 applications for a loan amounting to 52 billion tenge were approved under the 7-20-25 program.

“The progress of the work carried out is regularly reported in the media, social networks, there is a 24-hour call center. The territorial branches of the National Bank and the mortgage organization Baspana hold meetings with the population and labor collectives in all regions. Outreach coverage amounted to 6 million citizens,” said Akishev.

To update the Program, the National Bank of Kazakhstan offers a number of measures:

  • housing construction under the program in prospective regions, taking into account the demand for housing, demographic growth, population migration;
  • giving local executive bodies the right to raise financing for housing construction at the expense of the Baspana;
  • sale of housing built under the Nurly Zher State Program, equally to investors and waiting list through the Housing Construction Savings Bank, and to all citizens through mortgage loans under the 7-20-25 Program;
  • issuing housing certificates should be selective and allowed only at the start of the program;
  • Government’s studying of the possibility of granting the right to participate in the Program to citizens who have housing by right of ownership.

First Vice Minister of National Economy Ruslan Dalenov reported on the work being done to ensure the reduction of the tax burden to increase the wages of low-wage workers as part of the implementation of the second direction of the Five Social Initiatives.

“All the preparatory work has been completed. Legislative changes came into force on Jan. 1, 2019, explanatory work was carried out among taxpayers, compensation to local budgets is provided, the norms are already applied,” said Dalenov.

Regarding legislative changes, the first vice minister said that the Tax Code has changed the order for those who have wages below 63,125 tenge. According to them, the tax burden has already been reduced 10 times and about 2 million workers will receive additional income of up to 15 thousand tenge per year.

Regarding compensation to local budgets, it was noted that the changes will entail losses of local budgets. In this regard, these losses were reviewed and supported at the meeting of the republican budgetary commission. The transfers were incorporated in the Republican budget. Thus, revenues of local budgets are not reduced due to the benefits.

Dalenov also reported that all employers are familiar with the changes, explanatory work has been conducted among the population.

The second initiative is also tasked with studying the possibility of introducing a progressive scale of individual income tax. According to the first vice minister, international experience was studied and a detailed analysis of the current situation in the payment of hired labor was carried out.

In general, according to the ministry, the order to reduce the tax burden on low-paid workers has been executed.

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