Russia hikes taxes on wealthy to fund ongoing Ukraine conflict

Russia's State Duma has passed a bill to change the tax system, reports the daily "Kommersant." Additional revenues to the budget will come from those earning over 2,400,000 rubles a year, equivalent to about $35,000 CAD at the current exchange rate.

The Kremlin announced tax increases even before the presidential "elections," which were held in the first half of the year. The State Duma (equivalent to the Canadian House of Commons) passed the bill on Tuesday, July 9, according to "Kommersant."

Currently, in Russia, there are two rates for individuals — 13 percent for up to 5,000,000 rubles a year and 15 percent above that threshold. The bill introduces more brackets.

The rate will increase to 15 percent for incomes from 2,400,000 to 5,000,000 rubles a year, 18 percent for 5,000,000 to 20,000,000 rubles, 20 percent for 20,000,000 to 50,000,000 rubles, and 22 percent for over 50,000,000 rubles. The rate for citizens with incomes below 2,400,000 rubles a year will remain at 13 percent, analyzes the Russian daily. Companies, in turn, will have to pay a tax of 25 percent instead of 20 percent.

Russia, as Bloomberg calculated in March, wants to collect 4 trillion rubles, which amounts to about $74 billion CAD through higher taxes. The money is intended to finance the military aggression in Ukraine.

Andrei Makarov, Chairman of the State Duma's Budget and Tax Committee, told Kommersant that the tax changes have several goals. This includes generating additional revenue to finance current priorities and new support measures.

The Daily notes that theoretically, these taxes are supposed to affect 3 percent of Russians, but in practice, everyone will feel the consequences because companies will raise product prices. - We still have a market economy, and prices are regulated by supply and demand - summarized Makarov.