Russia's Wealthy Face Higher Taxes Amid Military Campaign

Russia's parliament has given preliminary approval to a bill proposing higher income taxes for the wealthy, aiming to fund military expenses in Ukraine. The bill introduces a progressive tax system, replacing the current flat-rate, to generate additional revenue.

Russia's parliament has taken a significant step by giving preliminary approval to a bill that proposes higher income taxes for the country's wealthy elite. The move comes in the backdrop of Moscow's escalating military expenditure in Ukraine.

The new bill, passed in the first of three readings in the State Duma, represents a notable shift from the existing flat-rate tax system, which was introduced in 2001 to bring order and enhance tax collections. The proposed changes aim to introduce a progressive tax system, with income taxes starting at 13% for earnings up to 2.4 million rubles ($27,500) annually. Incomes surpassing this threshold would be subjected to higher tax rates, reaching up to 22% for those earning more than 50 million rubles ($573,000) annually.

Russian President Vladimir Putin mentioned that the new tax regime would affect no more than 3.2% of taxpayers, based on estimates from the Finance Ministry. Additionally, the bill proposes raising the company income tax rate from 20% to 25%, potentially generating an extra 2.6 trillion rubles ($29 billion) by 2025. This revenue boost is crucial for supporting the federal budget amid ongoing defense-related expenditures.