After more than two years of war against Ukraine, the Russian government wants to impose more taxes on higher incomes and corporate profits. Soldiers in a war zone are exempt from this measure. The Kremlin said the additional revenue would be used for social purposes.
The Ministry of Finance in Moscow published on Tuesday evening the most important data already announced by Kremlin chief Vladimir Putin. Accordingly, the current top income tax rate of 15 percent should increase by seven points to 22 percent.
The lowest tax rate is still 13 percent – for incomes up to 2.4 million rubles per year (about 24,000 euros). Taxes on corporate profits will increase from 20 to 25 percent. In this way, Russia can also increase its reserves, which have been reduced by the war against Ukraine that has been going on for more than two years. Since the start of the war, reserves in the National Prosperity Fund (NWF) have shrunk by about half, while liquid assets recently amounted to the equivalent of 50 billion euros. The money from the fund was repeatedly used to offset the budget deficit.
Soldiers and self-employed people are not affected
According to the information, the staggered increases will affect around three percent of employees or two and a half million people who earn more than the equivalent of 2,000 euros per month. The top rate only applies to an annual income equal to more than half a million euros. Soldiers in war zones who earn relatively high amounts, as well as self-employed people, are exempt from the innovations.
In addition to the enormous expenditure on the war economy, the Russian leadership must continue to fulfill many social tasks. Therefore, the state, which depends on oil and gas sales, is dependent on additional revenue. The highest tax increases under Putin so far have yet to be approved by parliament.
According to the Ministry of Finance, the state wants to spend the additional income on family, children and youth projects, as well as on the construction of apartments and roads and on the development of the IT industry. Part of the money will also be spent on other social purposes, including the renovation or expansion of medical facilities, schools, kindergartens and universities.
“The adoption of these proposed changes will ensure stable and predictable conditions for citizens, businesses and regions over the next six years. And this ensures growth of the country’s economic prosperity,” Finance Minister Anton Siluanov said in a statement.
Source: Krone
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