Russia Proposes Progressive Tax: Targeting Wealthy Elite

Moscow, May 29 (AP) — Russia's finance ministry proposed higher income taxes for the wealthy to fund the military campaign in Ukraine. The proposal suggests a progressive tax system, altering the existing flat-rate tax. It aims to impact only 3.2% of the workforce, potentially raising significant revenue.

Russia's wealthy elite could face higher income taxes, according to a proposal the country's finance ministry floated on Tuesday.

The proposal, which would likely have to go through parliament for approval and subsequently a signoff by President Vladimir Putin, comes as Russia continues to spend vast amounts of money on the military campaign in Ukraine.

The proposal involves a progressive tax on personal incomes and represents a change of course from the current flat-rate tax that was credited with bringing order and improving tax collections after it was introduced in 2001.

It envisages imposing a 13 per cent tax for incomes of up to 2.4 million rubles (USD 27,000) a year. For incomes over that amount, a steadily higher tax rates would apply. The maximum tax would be 22 per cent for annual incomes exceeding 50 million rubles (USD 555,000).

The increased taxes would affect only 3.2 per cent of Russia's working population, Finance Minister Anton Siluanov said on the ministry's website. The 2.4-million-ruble level is about three times higher than the country's average salary, he said in a commentary.

''The proposed progressive scale should not concern the overwhelming majority of the population,” he said.

The 13 per cent flat tax was put into effect in an attempt to discourage tax evaders and boost the state's revenue. In 2021, Russia modified the system so that people earning more than 5 million rubles a year would pay 15 per cent on the amount above the threshold.

That new tax brought in an extra 8.3 billion rubles the first year it was imposed, the Russian business news site RBC reported.