Income tax will go out of turn – Kommersant

The State Duma yesterday immediately adopted in three readings a law on the priority of personal income tax when crediting the amounts of a single tax payment to the budgets and on its “protection” from redistribution when paying off arrears on other taxes. The changes should remove the claims of the regions that faced cash gaps after the start of the application of the new single tax account mechanism. Experts note that the adopted law actually establishes the priority of regional budgets in the distribution of state tax revenues.

The law on the priority transfer of personal income tax to budgets under the new mechanism of the single tax account (UNS) was approved yesterday by the State Duma in the first reading and as a whole. It was submitted to the lower chamber by a group of senators and deputies only last week (see Kommersant of May 12) – with a positive response from the government. Andrey Makarov, the head of the Duma Committee on Budget and Taxes, yesterday explained the haste in adopting the project by the need for “the funds to go to the municipalities and regions as soon as possible.” The law will come into force from the moment of its publication.

Recall that the problem of cash gaps in regional and municipal budgets arose after the introduction of the UNS, which involves the transfer of payments by taxpayers to the budget to a single account in the Treasury. The tax authorities themselves distribute a single payment against all taxes – first for arrears, then for the taxes themselves, and then for advance payments, fees, insurance premiums, penalties, interest and fines. Personal income tax, being one of the main sources of tax revenues of the constituent entities of the Russian Federation, at the same time was used to pay off arrears on other taxes, which created difficulties for the budgets. In this regard, the regions previously proposed to withdraw personal income tax from the UNS, but the Ministry of Finance did not support this idea, since it violates the concept of a single account.

As a result, the law adopted a compromise option to give income tax priority over other payments by revising the order in which funds are credited to the budgets. First, the personal income tax arrears will be credited, then the income tax itself, and after that, as usual, the arrears on other taxes, taxes, and so on. “If there are not enough funds, it will be impossible to set off personal income tax against other taxes,” Andrey Makarov explained yesterday.

To speed up the process, automatic offset is also provided: if there is a positive balance of the UNS, on the very next day after receipt of a notification of the calculated amounts of taxes and contributions (including personal income tax withheld by the tax agent), the tax authorities must credit income tax against the forthcoming obligation to pay it. The tax agent (company) will not be able to cancel such an offset, that is, it will be impossible to use the funds of personal income tax withheld, but not transferred to the budget, to fulfill other obligations.

“A clear idea of ​​the project is to prioritize the distribution of budget revenues from federal to regional revenues,” says Vladimir Saskov, an expert at the HSE Institute of Tax Management and Real Estate Economics. According to him, the debt on personal income tax is much less than on other taxes, and now, within the framework of the current order of distribution of funds, “personal income tax is lost and the regions receive less colossal money.”

Ilya Tsypkin, an expert at the ACRA sovereign and regional ratings group, adds that personal income tax is significant for many regions, and for municipalities it is the main type of tax revenue. At the end of 2022, personal income tax receipts formed an average of 30% of the tax and non-tax revenues of the regions. Yulia Gerasimova, head of the Budget Policy direction of the CSR, notes that personal income tax receipts have decreased compared to 2022 (by 17.2% year-on-year as of May 16). If this was caused by a change in the order of enrollment (or an increase in deductions, which fall mainly on March-April), then the problem will be solved. “At least with the introduction of new provisions, the regions will once again feel the rhythm of this tax revenue,” the expert says.

Evgenia Kryuchkova