Russia plans to raise taxes for corporations and wealthy individuals to cover the budget deficit caused by the war. The Ministry of Finance of the Russian Federation proposes to increase the corporate income tax by 5%, and from 2025 to raise the personal income tax rate for the highest incomes to 22% from the current 15%, reports UNN with reference to Bloomberg.
Details
Russia has announced plans to increase taxes for corporations and wealthy individuals aimed at a limited number of people, which could be a popular solution in the context of the ongoing invasion of Ukraine and growing pressure on the state budget. According to the plan of the Ministry of Finance of the Russian Federation, it is proposed to introduce a stricter progressive income tax, and the corporate income tax will increase to 25% from the current 20%.
Starting in 2025, the personal income tax rate for high incomes in the Russian Federation will increase to 22% from the current 15%. Fees for the extraction of iron ore and the production of potash and phosphorous fertilizers will also increase. According to forecasts, these measures will bring an additional 2.6 trillion rubles (2 29.2 billion).) in 2025, most of which will benefit from an increase in corporate tax.
The personal income tax in Russia will affect about 2 million people, or 3.2% of the total labor force, according to a statement by Finance Minister Anton Siluanov. Tax rates will range from the current 13% for those who earn up to 2.4 million rubles a year, to 22% for people with an income of more than 50 million rubles.
Anton Siluanov noted that these changes are aimed at achieving "social justice, including progressive tax rates." However, the tax increase will not affect the payment of dividends or the sale of shares, which are the main sources of wealth for the richest segments of the Russian population.
The publication notes that since the end of 2022, Russia has been facing a budget deficit, which indicates the high cost of Putin's invasion of Ukraine, which began in February of the same year.
""The draft budget provided for a reduction in expenditures by 2 trillion rubles in 2025, which looked very unrealistic. This difference had to be covered somehow. The option of raising taxes is the most conservative, the most balanced in the long term and the most non – inflationary," says Sofia Donets, an economist at Tinkoff investments.
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