Russia's Finance Ministry is proposing a gradual increase in property tax within the next five years, Finance Minister Alexei Kudrin said on Friday.

"There is a high potential in the property tax system, I believe, at least one percent of gross domestic product. In the next five years, we may gradually and accurately increase this tax," Kudrin told a tax conference.

The Moscow city parliament has considered the possibility of cancelling exemptions for property taxes, he added. "The city will finally start earning money on the property, which is the main source for the city of Moscow," Kudrin added.

Organizations pay property taxes, calculated on the basis of a book value and amounting to 2.2 percent at most to regional budgets, while households pay property taxes, which stand at two percent at most, to municipal budgets.

Ilya Trunin, director of the Finance Ministry's tax, customs and tariff department, has said that a property tax calculated on a market value basis could be introduced in 2013.

MOSCOW, November 19 (RIA Novosti)