THE MESSAGE
THE HEAD OF STATE K.K. TOKAYEV
TO THE PEOPLE OF KAZAKHSTAN
A JUST STATE. UNITED NATION. A PROSPEROUS SOCIETY
Dear compatriots!
Dear deputies, members of the Government!
In accordance with article 59 of the Constitution of the Republic of Kazakhstan, I declare the third session of the Parliament of the VII convocation open.
Dear deputies!
Congratulations to everyone on the start of the next session of Parliament!
This year, our country has entered a new stage of development.
At the national referendum, the majority of citizens supported the course of political modernization.
The constitutional reform has become a fundamental step in the creation of a New Just Kazakhstan.
Structural economic transformations should be the continuation of political modernization.
We are going to have a profound restructuring of relations in the triad "citizen – business – state".
First of all, the State will ensure equality of opportunity and justice for all.
A high level of public goods and support for socially vulnerable categories of the population, including citizens with special needs, will be guaranteed. An appropriate institution of the Ombudsman under the President will be created.
The state will fully support economic freedom, but at the same time will resolutely protect citizens in case of excessive market fluctuations.
Small and medium-sized businesses will receive strong development.
Now I will outline specific areas of reform.
first. NEW ECONOMIC POLICY
The systemic problems of our economy are well known. These are commodity dependence, low labor productivity, insufficient level of innovation, and uneven income distribution.
Of course, all these are difficult problems, but there are specific ways to solve them.
These are macroeconomic stability, economic diversification, digitalization, the development of small and medium-sized businesses, human capital, and ensuring the rule of law.
However, there is still no tangible progress on these issues. Obviously, new approaches are needed.
The basic goal of our economic policy remains unchanged – the qualitative and inclusive growth of the well-being of our citizens.
The priorities of the new economic course will be:
– stimulating private entrepreneurial initiative, that is, moving away from state capitalism and excessive state intervention in the economy;
– development of competition, that is, ensuring equal opportunities for all;
– and, of course, a fair distribution of national income.
All this involves solving a number of priority tasks.
First. Administrative price regulation reduces the investment attractiveness of entire industries, leads to a shortage of goods and dependence on imports.
Therefore, it is necessary to phase out government intervention in pricing.
The exception will be uncompetitive markets – tariffs of monopolists will remain under tight control. But control does not mean pressure at all.
Today, cases have become more frequent when government agencies, including law enforcement agencies, rushed to check businesses and demand lower prices and tariffs. Such populist actions must be stopped.
It is important to strike a balance between the need to limit the profits of monopolies and ensure investment in infrastructure.
Two thirds of the country's electricity supply networks, 57% of thermal communications and almost half of the water supply networks are worn out. These figures speak for themselves.
Artificial tariff containment is fraught with rolling blackouts, accidents, and, as a result, a threat to the health and lives of citizens.
In monopoly markets, it is necessary to switch to a new tariff policy "Tariff in exchange for investments".
Network and capacity wear indicators need to be reduced by at least 15%.
The tariff will be provided in exchange for investments in infrastructure and participation in the state monitoring system to ensure transparency. The owner must make a significant part of the investment from his own funds, and not at the expense of the tariff.
Effective incentives for innovation should be developed, part of the costs should be redistributed within the tariff estimate and a certain share of income should be retained.
It is necessary to gradually abandon the cross-subsidization of tariffs, in which prices for some consumers are restrained by increasing the cost of services for others.
Second. Institutional solutions are required for further demonopolization of the economy.
It is necessary to define the concept of "conglomerate" at the legislative level.
Related market entities are required to obtain permission for economic concentration.
All their transactions should be carefully checked, including for signs of non-market prices.
The development of a market economy is negatively affected by the activities of single operators.
Therefore, this institution should be regulated.
Existing operators should be transferred to a competitive environment or recognized as monopolists, and their activities should be regulated within the framework of special antitrust law.
The third. Sustainable economic growth directly depends on a clear, predictable tax policy.
In order to reset fiscal regulation, a new Tax Code will be prepared in 2023.
Its most problematic block, tax administration, needs to be completely updated.
It is also necessary to ensure the complete digitalization of tax control, eliminating any face-to-face interaction.
Another priority is to increase the effectiveness of tax incentives.
To do this, it is necessary to switch to differentiated tax rates in different sectors of the economy.
It is necessary to introduce mechanisms to reduce or exempt from corporate income tax on profits aimed at technological modernization and scientific research.
Special tax regimes will need to be simplified in order to minimize the temptations for tax evasion.
The new Code should provide for the prevention of intentional fragmentation of organizations in order to reduce the tax burden.
In order to develop civilized trade, it is necessary to expand the application of retail tax with adequate rates and simple procedures.
As part of the tax reform, it is important to consider the possibility of introducing a so-called "luxury tax".
It will be charged for the purchase of expensive real estate, vehicles and will not affect the middle class.
I will focus separately on the topic of fees when buying cars.
Everyone knows the problem with cars from some neighboring countries.
They remain outside the legal field, posing a threat to public safety.
It is necessary to take decisive measures to block all illegal channels for the import of cars in the future.
At the same time, it is necessary to resolve the situation with such cars imported before September 1 of this year.
To legalize them, I propose to apply a single fee for recycling and initial registration in the amount not exceeding 200-250 thousand tenge on a one-time basis.
This measure should apply to cars that are not wanted and have passed customs clearance.
Fourth. Effective tax policy is closely linked to transparent customs administration.
It is important to complete the full integration of tax and customs information systems.
Further. A lot of inspectors is one of the main reasons for inefficiency.
Therefore, it is necessary to introduce an integrated customs control mechanism at the border.
Customs clearance centers should operate on the principle of "one window".
Fifth. We need to learn how to live within our means.
The budget policy model will be reformed by moving from "budget management" to "results management".
It is necessary to fix the maximum standards directly in the Budget Code, which are mandatory for compliance with budget planning and execution.
The practice of inefficient spending of the National Fund's resources will be stopped. This is extremely important.
At the same time, transfers from the National Fund will continue, but exclusively for the development of critical infrastructure and projects of national importance.
It is necessary to radically simplify budget processes.
It is also necessary to allow government agencies to transfer undeveloped funds to the next year. This solution will help to get rid of the inefficient practice of returning money to the budget.
At the same time, it is necessary to launch a budget risk management system, including the quasi-public sector.
We have started transferring tax revenues to the regions, and this work needs to be continued.
The proven project "Budget of popular Participation" should be scaled up to cities of regional significance and villages.
At the same time, with the involvement of the public, at least 10% of housing and communal services expenses should be formed.
For the effective implementation of these approaches, it is necessary to adopt a new Budget Code.
Sixth. Systematic support for entrepreneurship.
Here, first of all, it is necessary to launch a full-fledged "regulation from scratch". This assignment has been delayed for two years.
Instead of endless adjustments of hundreds and thousands of by-laws and instructions, new compact and understandable rules of operation should be approved.
This approach should be fully implemented from January 1, 2024.
Further. When providing financial support, the state will give priority to competitive small and medium-sized enterprises.
The basic criteria for such assistance will be an increase in the wage fund and an increase in tax deductions.
In parallel, an automated system for determining recipients of state support measures will be introduced.
It is necessary to build a qualitatively new public procurement system.
The priority should be the quality of the purchased goods and services, not the minimum price.
Procurement of public and quasi-public organizations must be transferred to a single platform.
To implement these approaches, it will be necessary to adopt a new law "On Public Procurement".
Seventh. It is necessary to switch to a new model of public-private partnership.
Today, many PPP projects have become a "feeder" for unscrupulous entrepreneurs and officials.
Contracts in this area should be transparent and concluded on a competitive basis.
To increase the effectiveness of this mechanism, it is necessary to adopt an appropriate law.