Personal Income Tax Set to Rise to 15%.

Nikolai Azarov, finance minister and first deputy prime minister, said the government planned to let the personal income tax rate increase in January 2007 to 15% from the current 13%, as scheduled in a law adopted back in 2003. Alexander Viktorov: The increase in the personal income tax rate combined with the expected slower pace of growth in disposable incomes will result in a slowdown of growth in consumption next year. We expect growth in consumption to slow to 9-10% yoy from our forecast of 13% yoy in 2006. However, investment is expected to continue its current recovery trend into 2007 thanks to relative political stability and efforts to reduce gas consumption. We expect gross capital accumulation of fixed to grow by 15% yoy in 2006 and to accelerate to 17% yoy in 2007.