Russia to hike taxes on high earners after coronavirus

Agence France-Presse
Russia to hike taxes on high earners after coronavirus


Russian President Vladimir Putin says extra revenues from higher taxes starting 2021 would be used for 'treating children with severe rare diseases'

MOSCOW, Russia – President Vladimir Putin said on Tuesday, June 23, that Russia will from next year increase taxes on high earners, the first hike in decades, as he laid out measures to tackle the economic fallout of the coronavirus.

Addressing Russians in a lengthy televised speech, Putin said the country is facing huge economic challenges after the coronavirus epidemic and associated restrictions on business.

A week before Russia votes for constitutional changes that give him the possibility to run for president two more times, Putin praised Russians for coming through “the most dangerous stage of the epidemic.”

“In all, we have forced the epidemic to retreat…but the virus is still dangerous,” he said. “The fight against the epidemic is ongoing.”

Russia is currently ranked 3rd in the world for the total number of cases with nearly 600,000 people having tested positive for the coronavirus.

The country has however reported a considerably lower number of deaths associated with the infection than other countries where the epidemic was severe, with the total toll at 8,359.

Announcing an extension of the government’s financial aid to families and healthcare workers, Putin suddenly suggested that the country’s income tax policy be changed in order to finance treatment of children with rare diseases.

He said that from January 1, 2021, the tax rate will rise from 13% to 15% on income over 5 million rubles ($73,000), in Russia’s first move away from a flat tax rate introduced in 2001. 

“Since 2001, we have had a flat tax. Its introduction at the time allowed us to take incomes out of the shadows, to make taxation easier,” he said.

“But now with a better quality of administration and the introduction of digital technologies, we can spread the tax burden in a differential way and direct the additional funds towards solving specific and important issues,” he said.

The extra revenues would be used for “treating children with severe rare diseases,” buying expensive medication and funding complicated surgeries, Putin said.

He said the 15% tax would only be applied to income people make on top of the 5-million-ruble mark, not their entire income.

“But even that would add about 60 billion rubles ($872 million) to the budget,” he said.

Russia’s economic output fell by 12% in April year-on-year, and by 10.9% in May, according to the government. The central bank predicts the country won’t return to pre-crisis levels of growth before 2022. (READ: Russian small businesses reopen to uncertain future)

“The past months have been a time of massive challenges and difficult trials,” Putin said, outlining various measures to boost Russia’s economic recovery, such as lowering taxes for some industries.

“In essence, a global recession has begun…. The depth of this crisis is yet to be evaluated,” he said. “For Russia this is also a serious challenge.” –

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