Putin’s tax hike taps Russians for war chest
Putin approved a sharp tax increase for Russians and Russian companies. It will provide additional funds for the war unleashed by the Kremlin, writes "Rzeczpospolita." Over the next six years, this will amount to 17 trillion rubles or approximately 270 billion CAD.
The document signed by Vladimir Putin introduces a progressive personal income tax (PIT) scale, and the corporate income tax (CIT) will be increased. The new PIT tax rates will be:
- 22% for the highest earners, i.e., Russians with an income of more than 1.8 million CAD annually
- 20% for those earning more than 720,000 CAD annually,
- 18% for those earning more than 180,000 CAD annually,
- 15% for Russians earning between 87,000 and 180,000 CAD annually.
Tax increase in Russia
The Kremlin is introducing these changes for all Russians except for the "participants" of the Russian aggression in Ukraine. Families with more than two children and an income not exceeding the equivalent of 280 CAD per month will pay a PIT rate of 7% instead of the standard 13% rate.
In 2025, due to the tax increases, an additional 22 billion CAD is expected to flow into the Kremlin's budget, and by 2030 - 125 billion CAD. "The tax increases will hit Russian businesses even harder. Over the next 6 years, entrepreneurs will pay the state treasury an additional 450 billion CAD. From 2025, the CIT rate in Russia will jump from 20% to 25%," it reads.
Putin needs money for the war
- Raising taxes will help Putin fund his war in Ukraine – notes Alexander Isakov, Chief Economist for Russia at Bloomberg Economics.
"Almost all of the extra money will go to the federal treasury, which is yet another confirmation that these are war levies," writes "Rz."
This year, the Russian federal budget will spend a record 184 billion CAD on defence, with military spending accounting for 30% of the budget—an amount unseen since Soviet times, emphasizes Isakov.
As the newspaper points out, the Kremlin convinces Russians that this is all for their benefit without mentioning the war. After the law was adopted, Vyacheslav Volodin, the head of the Russian Duma, stated that raising taxes was supposed to "develop the economy" and stabilize the tax system.
