Russia’s government is developing plans to introduce a progressive personal income tax, reports the Russian media. Russia currently has a flat tax of 13% that was introduced during the first Putin administration.
Deputy Prime Minister Olga Golodets said that she thought that creating a progressive income tax scale would help to alleviate poverty, by exempting a certain portion of low income earners (similar to the US system).
Russia’s Finance Minister Anton Siluanov is opposed to the plan of reintroducing a progressive income tax, but told the State Duma last week that the government has held talks about “the pros and cons of this decision”. He pointed out that in the current economic environment with “falling real incomes, [and] no sustainable growth”, that businesses would move underground.
Dmitry Abzalov, of the Centre for Strategic Communications, told Rosbalt that “…a progressive tax is perceived by citizens as more equitable.”
“At one time the flat rate was introduced in order… to return citizens to pay taxes. Now, we must understand that there are some taxpayers, such as the employees of state-owned and large private companies. For them it will be very difficult to move their salaries into offshore companies. Accordingly, the payment of the tax will fall exactly on this segment. But some entrepreneurs will go offshore because it would unprofitable for them to pay this tax.”
He compared the situation to what happened when France “reformed” their tax system. “…some of the private companies simply left the country…” because the tax burden was too high. And, Abzalov notes, “…some Russian companies, large businesses, can also be re-registered within the borders of the Customs Union, Kazakhstan and Belarus.”
Former MP Dmitry Gudkov, reminded his followers on Facebook that while the income tax is 13%, the actual percentage is closer to about 43% if you factor in pension and health care contributions, etc.
And what will happen if this is implemented, Gudkov asks rhetorically. More jobs will be paid under the table. And for the “very rich”, it “…will be an added incentive to carefully leave, as Alisher Usmanov recently did.”
And where will that extra money the government hopes to get from this proposal go? Not to help the ill and the poor, but to finance the Regime’s imperial ambitions, to pay for the war in Syria, “and to line the palace floors of the corrupt”, Gudkov concludes.