Page 23 - RusRPTApr20

The main plank of the new taxes, sold as a “tax on the rich,” is a 13% tax on bank deposits and bond holdings over RUB1mn ($12,500), however, The Bell reports that this will affect some 55% of all savings deposits in Russia and is better classed as a “tax on the middle class.” Moreover, the new taxes will only come into force at the start of next year, well after the coronavirus epidemic is expected to have burnt out.
A second innovation was a 15% tax on interest and dividend payments that leave the country via offshore holdings, which really does target the wealthy. Putin threatened to withdraw from Russia’s double taxation treaties with any country that objects to this new tax.
“With these taxes, the government is attempting to present itself as redistributing wealth in a time of crisis, although, in reality, only the second measure is ‘a tax on the wealthy’. In order to maintain the illusion, Putin had to get creative with the numbers,” The Bell said in a commentary.
Putin claimed that the 13% tax on savings will affect less than 1% of overall deposits, although the next day his press secretary Dmitry Peskov upped the estimate to 10% of all deposits. The official statistics show that such deposits comprise 55% of the banking system, according to The Bell, “and $12,500 is a relatively common amount to have in a savings account.”
“Most analysts agreed that Putin was simply using the situation to announce unpopular measures (after VAT rises in 2018, Putin pledged there would be no increase in the tax burden on businesses before 2024),” The Bell said.
It seems that Putin successfully buried the bad news lead as The Bell reports most small companies and voters are more concerned with the immediate impact of the virus. A majority of Russians don’t believe their country’s official coronavirus data, according to a study published by the independent Levada Center pollster on March 26.
Russia has reported 1,036 cases of coronavirus as of March 27 and the numbers are starting to rise quickly now that Russia, and especially Moscow, has stepped up its testing as of last week. There are also a total of three deaths so far and 45 people have already recovered, according to John Hopkins University.
Moscow Mayor Sergei Sobyanin, who is leading the national coronavirus taskforce, warned President Vladimir Putin last week that official figures were likely underestimating the spread of the disease.
Putin met with business owners to get their reaction to the proposed week long holiday that starts on March 31 and other support measures for small and medium-sized enterprises (SMEs) but was chewed out in public by one business owner.
Anastasia Tatulova popular Moscow cafe chain and was almost in tears as she appealed to the president: “I will try to beg you without tears, but it is a real tragedy, an absolute tragedy... The government should not promise to send in the prosecutors if we fire people. In actual fact, I don’t care any longer: if I do one thing, it’s criminal charges; if I do another it’s criminal charges; and if I do nothing then I’m bankrupt,” she said as cited by The Bell.
Information remains sketchy, but reportedly about 20% of companies plan to cut salaries, and 30% have already done so according to local reports.
2.10 Watcom Shopping index collapses in March
The Watcom shopping index, which measures foot traffic in Moscow’s largest malls in real time, collapsed at the start of this week, falling by 70.9% year-on-
23 RUSSIA Country Report April 2020 www.intellinews.com