Sacred Flat Tax

Ania Dorn wrote on her Facebook page yesterday regarding government claims that Russia has a 13% flat income tax. Yes, she acknowledges, a person’s gross salary is taxed 13%. But another 30% is paid by employers: 22% goes into the pension fund, 5% for health insurance, and 3% for social insurance. So, for example, she explains, for you to receive a net salary of 1000 rubles, your employer is actually paying 1643 rubles.

Then there is the housing and communal services tax, and the new tax for capital repairs (“which most of us can hardly expect to see in our lifetime”), and “taxes on real estate and cars…”

“And then miracles begin. Because in addition to this, we pay excise taxes on fuel, alcohol, and cigarettes…” and VAT (which is 18%) is included in the price of goods. Of course, she says, VAT is paid by the seller to the state, but it is included in the price of goods purchased, so that the buyer bears the burden of this, and the 43% tax the employer pays for their workers, and the 20% tax on profit. And then there is the “Platon” tax that truckers are paying to deliver the goods to the vendors.

Dorn concedes that small and medium sized businesses could file for refunds for the VAT but that the process is so cumbersome that most of them prefer to avoid it.

As a result goods and services cost at least twice their actual cost.

And meanwhile, she continues, “the average salary in the country is recorded as 64.3% higher in official statistics, than what citizens actually get their hands on – with the result that the president is surprised when a regional teacher runs to him with complaints that she is receiving 15,000 rubles rather than the 25,000 ruble [official salary]”.

“But… the king-father – the great economist with a PhD…” still thinks that the salary is 25,000 and believes in the “sacred” 13% flat tax (“nowhere in the world is lower”). And instead he blames the “fifth column”, calling those who complain “provocateurs, spies, SBU [Ukraine’s security service] agents, and State Department collaborators.”

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