Economist Nikolaev assessed upcoming innovations in the principles of taxation of Russians

The monetary authorities are preparing changes to the personal income tax scale and the income tax rate. The Ministry of Finance began this work at the end of last year, but it entered an active phase after the recent announcement of the President’s message. In it, Vladimir Putin called for “a more equitable distribution of the tax burden.”

The introduction of a progressive tax scale is not a new topic for Russia. For as many years as we have been building capitalism, we have been talking about it for so many years. After all, this does not fit into any gates: both the poor and the rich (owners of factories, newspapers, ships), in fact, pay the same taxes: 13%.

At the same time, we should not forget that from 1992 to 2001 Russia had an unsuccessful experience with a progressive scale. Then the richest citizens had to pay 40% of their income to the treasury. Need I say that they avoided such a duty by hook or by crook? The budget was empty. And the authorities rightly fear that the story of mass non-payment may repeat itself if they go too far with personal income tax interest.

Although politicians and parliamentarians constantly proposed options on a progressive scale. In particular, bills were introduced into parliament with proposals to raise the upper limit of personal income tax to 25% and even 35% for the richest. But each time the initiatives remained without government approval.

But now, after the president’s recent message to the Federal Assembly, the ice has broken and the corresponding work has begun to boil in the Cabinet. According to sources close to high offices, the expected changes to the Tax Code can be divided into three groups.

The first is the income tax system. There are no ready-made solutions (specific rates for fixed incomes) yet. Various options are being considered. However, it is already reliably known that a reduction in the base rate of 13% for the poor cannot be expected.

The second topic, which is also discussed in government circles, is income tax. Here we are talking about an increase in fees, which, according to a number of analysts, could deal a serious blow to the economy of enterprises. Today this tax is 20%, three of which go to the federal budget, and the rest to the regional ones. And although the figure for the new tax is not mentioned anywhere, a number of experts believe that if this indicator increases, companies will lose interest in development.

The third group is tax benefits. Our fellow citizens with low incomes can receive them. As for income tax, those organizations that actively make capital investments in their activities can qualify for relief.

For Russians, such intentions of the authorities mean that the government will gradually begin to equalize incomes between different segments of the population. But in the expert community there is no consensus on the advisability of changes. Some are confident that Russia will experience a slowdown in GDP growth due to a reduction in the business activity of companies. Others, on the contrary, predict an increase in this indicator due to the influx of investment. .

We ask the chief researcher at the Institute of Economics of the Russian Academy of Sciences, Doctor of Economic Sciences Igor Nikolaev, about the prospects for income tax differentiation.

“The introduction of a progressive tax scale is long overdue in our society,” he believes. – Another thing is that the timing was not chosen for such a serious step.

– What do you have in mind?

– Whatever they say about the improvement of macroeconomic indicators at the end of 2023, our economy is in a difficult situation. Severe sanctions pressure continues and is unlikely to end in the near future. And the factors that determine macroeconomics are still temporary. In such conditions, sharp actions on the part of the monetary authorities can be quite dangerous. The transition to the new tax system should be smooth.

– In your opinion, what should the scale rate be?

– It is of key importance in this case. Now the scale is simple: 13% for almost everyone and 15% for individuals with incomes of more than 5 million rubles per year. In my opinion, the upper bar can be raised to 20% – this is the maximum from the point of view of moving to a progressive scale. Introducing a prohibitive rate of 35-40%, as was the case in the 90s of the last century, is too risky. Even with the current strict financial control, the budget may not receive additional taxes.

– So, 13; 15 and 20 percent depending on the income level of an individual?

– I would also introduce zero personal income tax into the progressive scale – for people with low incomes at the subsistence level. They could be exempted from paying income taxes altogether. That is, it is advisable to have four “cutoffs” on the scale: 0; 13; 15 and 20 percent.