2024-03-13 08:42:00
Russian President Vladimir Putin, in an interview with journalist Dmitry Kiselev, spoke out in support of progressive income. During the conversation, he emphasized that Russians should positively accept the new changes, according to which citizens with higher incomes will contribute more funds to the treasury. URA.RU explains what progressive taxation is and how taxes will be distributed in the future.
What is the essence of progressive taxation?
A progressive scale of taxation is a form of mandatory payments for citizens, the amount of which varies depending on the income level of Russians. That is, the more a person earns, the larger the percentage of the tax deduction will be. This tax format has already been introduced in the country.
New changes
At the end of February, the head of the Committee for the Protection of Competition, Valery Hartung, and the leader of the faction of the A Just Russia – For Truth party, Sergei Mironov, announced the development of a bill changing the amount of taxation. The document was then sent to the government for consideration.
According to the initiative, it is assumed that the minimum taxes will be paid by Russians with an income of up to 5 million rubles per year, they will be 13%. For those earning between 5 million and 25 million, the tax rate will be higher – 15% of income. The next level of 20% will cover those who receive from 24 million to 200 million rubles a year. Well, Russians earning more than 500 million rubles a year will give 25% to the treasury.
Putin supported the idea
During his address to the Federal Assembly in 2024, Vladimir Putin emphasized that the Russian authorities need to review the tax system. He is sure that it is necessary more fair distribute taxes. He also called for the elimination of loopholes that would allow tax avoidance, and also supported the idea of supporting businesses involved in the social sphere.
In a conversation with Kiselev, the Russian president again spoke in favor of progressive taxation. He is confident that society will positively accept the new initiatives.
A progressive tax has already been introduced previously
Even ex-President of Russia Boris Yeltsin, after the collapse of the Soviet Union, set the minimum personal income tax rate for incomes up to 42 thousand rubles at 12%. For citizens earning from 42 to 84 thousand rubles, the rate increased to 5,040 rubles plus 15% of the amount exceeding 42 thousand. If a citizen received more than 420 thousand rubles per month, he was taxed in the amount of 144 thousand and 60% of this amount. Also, this type of taxation also implied the exemption of certain types of income from tax, for example, northern allowances.
By the beginning of 2000, the progressive tax was still in effect in Russia. Then 13% was paid to the treasury by those who received up to 50 thousand rubles a year; 20% – those earning up to 150 thousand rubles per year and 30% – whose income exceeded 150 thousand rubles per year. However, a year later Russia switched to flat taxation. That is, all citizens paid income tax at the same rate of 13%.
In June 2020, Russian President Vladimir Putin proposed abandoning the flat scale of personal income tax and increasing the rate from 13% to 15% for citizens whose income exceeds 5 million rubles per year. The progressive scale began to be applied again from January 2021.
How does the progressive scale work in the West?
The concept of progressive taxation, where tax rates increase in line with income, has long been used in many countries around the world. In the US, for example, the personal income tax rate starts at 10% for income up to $10,275 and can reach 37%. In this case, taxation occurs gradually, with each dollar earned above the previous threshold.
In China, where they switched to a progressive tax system in 2011, the minimum rate is 3% and the maximum is 45%. The tax burden there is mitigated through various deductions that can reduce or even cancel tax obligations. For individual entrepreneurs and some organizations, rates vary from 5 to 35%.
European countries also show significant variation in tax rates: from 25 to 50% in Belgium and from 12.09 to 52.07% in Denmark. In the UK, Germany, France and other countries, the lowest incomes are exempt from taxation, while people with high incomes can give up to 45% to the state, and in Austria up to 55%.
Kazakhstan is also considering the possibility of introducing a progressive tax scale. In November 2023, proposals were discussed there to establish a two-stage system: maintaining a 10% rate for incomes up to 40 million tenge and increasing to 15% for higher incomes. In addition, the issue of increasing VAT and introducing additional taxes on luxury and excise taxes on expensive alcoholic beverages and tobacco products is being considered.
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