Russia’s Wealthy Elite Could Face Higher Income Taxes
Russia’s finance ministry has proposed a potential increase in income taxes for the country’s wealthy elite. The proposal, which would need approval from parliament and President Vladimir Putin, aims to introduce a progressive tax on personal incomes, departing from the current flat-rate tax system implemented in 2001.
Under the proposed plan, individuals earning up to 2.4 million rubles ($27,000) annually would face a 13 percent tax rate. For incomes exceeding that threshold, higher tax rates would apply, with a maximum rate of 22 percent for incomes over 50 million rubles ($555,000).
Finance Minister Anton Siluanov stated that only 3.2 percent of Russia’s working population would be impacted by the increased taxes. The proposed tax levels were designed with consideration for the majority of the population, as the 2.4 million rubles threshold is significantly higher than the country’s average salary.
The move towards a progressive tax system represents a shift from the flat tax rate, which was initially implemented to combat tax evasion and enhance state revenue. In 2021, Russia altered the system to impose a 15 percent tax on incomes exceeding 5 million rubles, resulting in an additional 8.3 billion rubles in revenue in the first year.
The proposed tax changes come as Russia allocates substantial resources towards its military campaign in Ukraine. The finance ministry’s proposal aims to ensure a fair distribution of tax burden among the wealthy elite while maintaining fiscal stability.
