Kremlin imposes higher taxes on wealthy to fund Ukraine war
The Russian State Duma has adopted a draft law to change the tax system, reports the daily "Kommersant." Additional budget revenues will come from those earning over 2.4 million rubles annually, which at the current exchange rate is about $24,000.
2:08 PM EDT, July 9, 2024
The Kremlin had announced tax hikes even before the presidential elections that took place in the first half of the year. The State Duma (equivalent to the Polish Sejm) adopted the law on Tuesday, July 9, according to "Kommersant."
Currently, in Russia, there are two rates for individuals—13 % for those earning up to 5 million rubles annually and 15% for those earning above that threshold. The new law introduces more tiers.
For income from 2.4 million to 5 million rubles annually, the rate will increase to 15%. For incomes from 5 million to 20 million rubles, the rate will rise to 18%. For incomes from 20 million to 50 million rubles, the rate will go up to 20%. For incomes over 50 million rubles, the rate will be 22%. The rate for citizens with incomes below 2.4 million rubles annually will remain at 13%. Companies, on the other hand, will pay a tax of 25%, up from 20%.
Higher taxes to finance the war in Ukraine
As Bloomberg calculated in March, Russia aims to collect 4 trillion rubles in higher taxes, which amounts to about $44 billion. The money is intended to finance the armed aggression against Ukraine.
"If we talk about the goals of the tax changes, there are several. This includes generating additional income to finance current priorities and new support measures," said Andrei Makarov, Chairman of the State Duma's Budget and Taxes Committee, to "Kommersant."
The daily points out that theoretically, these taxes will affect 3% of Russians, but in practice, everyone will feel the consequences as companies will raise product prices. "We still have a market economy, and prices are regulated by supply and demand," concluded Makarov.
