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Income tax in Russia will rise to 16 percent

Подоходный налог в России поднимут до 16 процентов

The Medvedev government has found a way to end poverty and demonstrates the struggle for social justice

Russian authorities are considering the initiative, according to which the tax to incomes of physical persons for individual groups may be cancelled.
 

In addition, it is proposed to implement a tax deduction from personal income tax which would be equal to the current subsistence level. About this “Vedomosti” with reference to the three Federal officials and a former official financial-economic bloc. The initiative aims to demonstrate the struggle for social justice.

Informed about the initiative said the head of Ministry of economic development Maxim Oreshkin. To abolish income tax for those whose income is below $ 10,000 or less (it is reported that those in the country of 12.7% to 18.6 million). It is possible to increase the personal income tax rate for other categories of citizens present 13% to 16%. In other words, taxes that do not pay the poor, in fact, proposed to shift onto the shoulders of other taxpayers.

Press Secretary of the President of Russia Dmitry Peskov said that the subject of the meeting on this occasion did not go. According to him, the government has no position, no decisions on this issue. In the government from commenting on this subject refused.

In any case, it is obvious that the increase in personal income tax will provoke a mass Exodus of Russians working in the informal sector and the VAT increase — another price increase that will only increase the number of poor.

It is a vicious circle? Is it not possible in another way to overcome poverty in Russia? And will the government on the above measures?

— Why not? Moreover, those who are now receiving official salaries, will not be so easy again “to leave in the shade” — says a political observer of the newspaper “2000” Dmitry Galkin. —Those who work without proper registration, or receives a large part of their salaries “black”, and so do not pay income tax. Russia’s problem is not in the low rate of personal income tax and not the government’s intention to increase it, and in the absence of a progressive scale of taxation. This is extremely unfair since people with high income consume significantly more of those public goods that are fully or partially reimbursed by the state. They often travel, and therefore more use of transport infrastructure. They often turn to the courts for resolution of commercial and property disputes. They have more property, which is under protection of law enforcement.

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— Why is it 16%? There are some calculations? And in other countries, as personal income tax? Maybe we are all not so bad?

— This approximately corresponds to the minimum rate of income tax in European countries. Thus, in Poland in October last year, the ruling party “law and justice” has reduced the minimum income tax rate from 18% to 17%. And income tax at the minimum rate of pay all whose income does not exceed 85 000 PLN per year (i.e. approximately $ 1,500 per month). And employees under 26 years do not pay income tax.

— Associate Professor, Financial University under the government of the Russian Federation Oleg Komolov considers that the abolition of personal income tax for the poor may lead to increased VAT and excise duties. Is it really so? What it may lead?

— Honestly, I find it hard to understand the logic of such calculations. Why you need to compensate for the drop in fiscal revenues associated with the abolition of income tax for the poor, by raising VAT? It may be easier to prevent Russian corporations to register offshore?

— The population of Russia will react? Real poor, of course, will be delighted, and the rest?

All. The majority of Russian citizens longer expect anything from the government is good, and therefore to increase the income tax react without much surprise.

— By the way, why not just introduce a progressive scale? Or maybe there are other ways to make life easier for the poor, not shifting the burden on others?

I don’t know why the government is so afraid of a progressive scale of taxation. In my opinion, this is an irrational fear. Ways to ease the plight of the poor, of course. The most effective, in my opinion, is to increase the tax burden on corporations, banning offshore.

— We have in the government people are so creative that I can do anything, — said the chief editor of FORUM. MSK Anatoly Baranov. They had paid an allowance at the birth of a child 50 rubles, and was not forgotten to take with him the tax. This year raised the allowance of as much as 200 times, and shout about this blessing at every corner! And you try to raise a child for 10 thousand rubles.

— If personal income tax for the poor will be lifted, whether they are in the country less?

They will cancel a tax on income below 10 thousand per month. Is not the income of the poor is the income of the poor, which can’t even feed themselves, let alone to pay for housing or to buy clothes. People with the income to dress in free second-hand, how they live, I even scary to think. And that they will not levy personal income tax, what happiness! And the fact that in a normal country such people, pay benefits, give food stamps, and free housing — they are silent about it.

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— Income tax of 13% is a lot or a little? How is it in other countries?

— In the USSR too was the income tax of 13%, but if your salary were, say, 200 rubles less than in Soviet times, for example, I didn’t receive the first 70 rubles, that is, with the minimum wage, the tax is not levied. The following seems to be 90 rubles, levied lower tax rate, and total tax of 13% was taken only with exceeding the threshold amount.

In principle, income tax of 13% is normal, but with above average incomes.

— Some experts are already saying that the abolition of personal income tax for the poor may lead to increased VAT and excise duties. But it’s ultimately against the poor and turn back. Because everything is more expensive, especially food…

— Well, they’re going to shift the cost for this “charity” on others, increasing personal income tax to 16%. So it’s not about reducing the tax burden and the redistribution. And these 3% above the current 13% is not only more than compensate for the taxes on 10 million, but will also give the Treasury a decent boost — if to believe, of course, Rosstat with its terms, average wage in the country.

— Will not increase if the number of formal poor, officially earning less than the taxable salary?

Is the basics of the excessive taxes generate a practice of mass evasion from them. Taxes should be such that it was more profitable to pay than to evade.

The source of “Vedomosti”, the government reports that the initiative aims to demonstrate the struggle for social justice.

They want to raise tax revenues from citizens, and make it a blessing. The impression that the Ministry of Finance sit not economists, and PR.

— How you can reduce the number of poor in Russia?

— To increase incomes. It is the only rational method. Another method was also used in old England — the poor just hung.
 

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