Senators approved the priority transfer of personal income tax to regional budgets

On May 24, the Federation Council supported a bill on the priority transfer of personal income tax to regional and municipal budgets. About it reported in the upper house of the Russian parliament.

“Introducing these amendments to the Tax Code will ensure that the necessary funds remain in the budgets of regions and municipalities,” the Federation Council added.

May 17 State Duma accepted bill in three readings. Changes to the Tax Code were initiated by a group of deputies headed by State Duma Chairman Vyacheslav Volodin and Federation Council Speaker Valentina Matviyenko.

The explanatory note states that personal income tax is the main source of tax revenues for the consolidated regional budgets in the regions. “The introduction of a single deadline for the payment of tax payments and the diversion of personal income tax to pay arrears on other taxes leads to an uneven flow of funds to budgets, their imbalance and does not allow to fully finance current budget expenditures,” the authors of the bill noted.

As conceived by the authors, the amendments are necessary to “improve the financial stability of regional and local budgets”, as well as to “more evenly finance the spending obligations” of the regions.