The rich will cry: with whom they can take increased personal income tax

The government is considering increasing tax revenues from the wealthy category, media sources said. In one of the scenarios, the introduction of a progressive scale of personal income tax is considered. For citizens with an income of more than 2-3 million rubles a year, personal income tax can grow up to 15%. The government refutes this information.

The effect of the coronavirus pandemic on the country’s economy returned the Russian government to a discussion of the likely increase in taxes for a wealthy class of Russians. This is reported by Forbes with reference to two sources familiar with the discussion of this issue. One of them is a federal official, and the second is a deputy. Most notably, this step of the government can be populist – according to the interlocutor of the magazine, the government wants to introduce a tax for the rich in view of the increased “request for social justice” in society.

A few Forbes sources participating in these discussions argue that the issue of different taxation options for different categories of citizens was actively discussed in the winter. The interlocutor of the publication says that various moves were analyzed even before the president’s message, which took place in January 2020.

“There are more than ten different options, the presidential administration and the government have a ready-made scenario, if necessary, you can simply get it and apply it,” Forbes quoted the official as saying.

As a solution to this problem, it was proposed to increase the personal income tax rate for the rich from 13% to 15%. The question of what amount of citizen’s earnings should be levied on personal income tax on the upper bar remained open. There were proposals to tax the annual income of 2-3 million rubles with the maximum tax rate, the source said. For the poorest part of society, with an income in the amount of a living wage or a little more, it was proposed to completely cancel personal income tax. At least such proposals were contained in scenarios sent to the presidential administration, Forbes experts say.

However, the government refuted information about the discussion on introducing a progressive tax on personal income. Spokesman for the Russian Prime Minister Boris Belyakov told RIA Novosti that nothing like this had been discussed. In the United Russia party, on the contrary, they supported this idea.

“We believe that it is not abrupt, but nevertheless it would be advisable to return to differentiation of income tax .. It should be increased. At the same time, we would suggest considering a reduction in income tax for the poorest part of citizens, ”Andrei Isaev, the first deputy chairman of the United Russia faction in the State Duma, told reporters.

The deputy at the same time cautioned against introducing “exorbitant amounts” of tax for wealthy citizens.

He is worried that as a result, the wealthy Russians will begin to withhold their income from the tax, and moreover, they will begin to withdraw them from the country.
Talks about taxes for the rich again appeared on the news agenda amid strong budget deficits. According to the Minister of Economic Development of the Russian Federation Maxim Reshetnikov, the budget deficit in 2020 may be 5-6%, a similar forecast is given by the Central Bank and Finance Minister Anton Siluanov.
The latter reported that budget revenues for this year will decrease by 4 trillion rubles compared with the figure that was originally planned. At the same time, the expenditure side of the budget will increase by approximately 1 trillion rubles.

The Forbes interlocutors in the government assure that the tax for the rich is not necessary to replenish the budget due to quarantine expenses, but in order to direct this money to social programs – to support poor citizens or pensioners.

In essence, there are no documented decisions on this issue, Forbes sources say. It is also important that the Ministry of Finance opposes this reform.

“If the increase in the tax rate is small, then the additional revenue from the change in the rate will be small, but the administration will be difficult,” the source explained to the Finance Ministry.

Last fall, at that time, the head of the Ministry of Economic Development Maxim Oreshkin said that the introduction of a progressive taxation scale in Russia makes it difficult to make a significant difference in the incomes of residents of the capital and regions. Oreshkin, expressing the position of the ministry, noted that taxation of luxury cars and luxury real estate is much more effective from the point of view of economic development. (Source: rambler)

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