We Deserve a Flat Tax

Many are claiming that the introduction of a progressive tax would help the poor and put additional funds in the budget, but this is false, writes Grigory Yavlinsky. In fact, it is just the opposite.

“In the current [economic] environment, with the introduction of a progressive tax, the amount of tax revenue would be reduced, “gray” [off the books] salaries will rise, a significant portion of businesses will seek to go into the shadows, people with high incomes will create a scheme to reduce tax payments with the help of legal tricks. But the middle class, professionals, small and medium businesses will pay in full. As a result, the incentives for increased efficiency and productivity will be reduced. We will have to work nearly 6 months to pay for the personal income tax, the insurance premiums… and fees. All this will lead to… a huge amount of people choosing to withdraw into the shadows.”

Another reason people don’t want to pay is that they are not sure that the government is being responsible with the money they are giving it, Yavlinsky continues. “”No taxation without representation.”  This is a political question: if people believe their government and can influence it, they will calmly pay high taxes.”

“In the meantime, if it [the government] really wants to fight poverty and inequality through the tax system, please – promote a non-taxable minimum income, exempt single parents, large families, and people under 25 from paying taxes… not to mention the change in the direction of the budget expenditures: only one day of the war in Syria in 2015 cost taxpayers about 170 million rubles, or thirteen thousand average pensions. Direct the money to pay pensions, and increase the minimum wage.”

Of course, some will argue that if you make exemptions for certain groups, then people will use them. And you will have more single parents, etc. “And as for budget spending, there is the argument: “it is necessary to save Bashar Assad!”

“That is why, because of the distrust of the state and [an environment] conducive to fraud at all levels… we are only fit for a flat tax. Because the flat tax is a tribute to the low level of economic and political culture in our country.”

And this can only change if Russia’s economic and political cultures change, Yavlinsky concludes.

“In the meantime, it’s too early to talk about it.”

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