Page 21 - RusRPTJul20

dacha; money in savings, etc.). The lower stratum of the middle class is under risk of transition to joining the poor. Small entrepreneurs will see their businesses downsizing significantly or shutting down. Inequality will probably rise, because the rich will stay rich while the middle classes will become poorer.
As for the implications it may have for Russia’s domestic politics, I think more people will demand political change, more representation, and more accountability from officials.
There won’t be a quick recovery, but I don’t expect any socio-economic catastrophe. If GDP is down five% for this year as the government expects, it will probably be fine. In case of a deeper slump (Between six and eight%, as expected by others including the World Bank and OECD), it would be more problematic. There is only a small probability of an unpaid-debt spiral so far because the government has assumed much of the potential liabilities of businesses through programs of loan guarantees and subsidized loans. If some of that debt becomes non-performing, the government has considerable leeway to take losses on those assets that could potentially go sour.”
2.14 ​ ​Kremlin considers hiking top level income taxes
Kremlin considering an end to flat rate income tax. ​Officials at the top of government are looking at scrapping the flat rate personal income tax, which has been a cornerstone of Russia's tax policy under Putin. The move would be marketed as promoting 'social justice' and likely coincide with the constitutional referendum scheduled for the end of June that could allow Putin to 'reset' his presidential term count.
The gap between poor and rich in Russia has always been enormous. Official statistics from the end of 2019 show (Rus) almost half of families could only afford to buy food and clothing. This is one of the reasons for the fall (Rus) in Putin's approval ratings.
Ahead of the referendum, the Kremlin has returned to the old idea of a progressive income tax scale for individuals. Journalists uncovered (Rus) these plans this week.
At the moment Russia has a personal income tax rate of 13%, a measure that was introduced by Putin in 2001 in a series of major tax reforms widely credited to former Finance Minister Aleksei Kudrin.
Under the proposals, this would be raised to 15% for those earning over 2mn rubles ($28,700) a year. Income tax could also be scrapped entirely for low earners.
A final decision on the changes has not yet been made. But if the authorities decide to act, Putin may appeal to 'social justice' and make the announcement in his annual televised Q&A just before the referendum.
21​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com