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Sales tax increase to force business to expand non-cash payments

A consumer may force a business to switch to new types of relationships and work using cashless settlements. The Economy Minister of Kyrgyzstan Oleg Pankratov told today at a press conference.

According to him, in 2015, the share of non-cash money in banks was 35.4 percent. In 2016, it was decided to cancel the sales tax for non-cash payments. This has brought a result. The share of non-cash money increased to 44.2 percent. But a few are ready to use non-cash payments so far. To stimulate business, it was decided to raise the sales tax from 2 to 5 percent.

«When new stores are opened, buyers are given gift cards with the same five percent discount. In such a way, a person is tied to a certain store. The state can also apply the marketing ploy. If a person knows that he or she gets 5 percent discount, they will subconsciously go to the store with cashless payments. The consumer will force the business to switch to new types of relations,» the Minister of Economy believes.

If a business is working in the shadows, it will continue doing so. But the consumer can vote with his feet when he or she goes to the store, where he will receive a discount of five percent.

Oleg Pankratov

«A situation, when the prime minister or the minister of economy by the strong-willed decision raises the tax is impossible for a long time. Tax increase is an unpopular measure. It is necessary to undergo certain procedures to adopt it. One of them is the Regulatory Impact assessment (RIA). One can confirm or deny the correctness of the initiative only through RIA,» concluded Oleg Pankratov.