Despite the government's promises to reduce the tax burden, the policy of the past few years has been left unchanged: old taxes are decreased very carefully, and in exchange for these reductions, taxpayers have to fulfill new obligations to the state, which are, at best, equal to the old ones.

The amount of taxes will decrease for a majority of average Russians this year. For example, the amount of social discounts and discounts for purchasers of property has been increased for all employed citizens since January 1. A citizen can be compensated for a part of the income tax, whose present rate is 13 percent. The maximum sum that the discount applies to has been raised to RUR1m ($34,317) for expenditures on buying an apartment and RUR38,000 ($1,304) for expenditures on healthcare and education.

Citizens who cannot afford paid medical or educational services will be eligible for a social discount. A compensation that can be received for such expenditures will reach about $150. It is expected that well-off people will avoid spending a lot of time and nerves on obtaining numerous certificates required for receiving this compensation.

However, the situation with the discount for purchasers of property is quite different. It is intended to boost the demand for real-estate, construction services and construction materials. For example, the amount of the tax discount will be RUR130,000 ($4,461) for a person who spent about $33,000 on buying an apartment in 2003.

At the same time citizens will have to pay extra taxes on housing, beginning in 2005. The government plans to introduce tough regulations for individuals who earlier privatized their housing. The property tax rate may be reduced to just 0.1 percent. The present maximum rate is 1 percent, and rates not exceeding 0.5 percent are applied in most regions. However, citizens will have to pay taxes on the basis of the market value of their housing, instead of the official value, calculated by the Bureau of Technical Inventory. The actual amount of tax is to increase by about threefold. The government's only problem now is to invent a method of estimating the market value of housing. This problem has so far been impossible to resolve, and it has caused an almost two-year delay in the adoption of the respective amendments to the tax law.

Additionally, Russians had been promised a fall in retail prices due to the cancellation of the 5-percent sales tax in 2004. However, during the first week of the New Year, prices have fallen insignificantly, and the decrease mostly applied to cheap products. Most retailers are likely to leave prices unchanged and to raise their profit margin by 5 percent, the Izvestia newspaper pointed out.