Page 54 - bne IntelliNews monthly country report Russia February 2024

These include regions whose economies are based on the rapidly growing defence industry.
In absolute figures, personal income tax payments for 11 months amounted to more than 4.9 trillion rubles. 4.8 trillion of them remained in the regional budgets (from the personal income tax, the federal budget only takes a few tens ofbns from the increased 15% tax on high salaries).
For comparison, in just 10 months, tax revenues to the consolidated budget of the Russian Federation amounted to 29.2 trillion rubles (+6.41%). The largest revenues come from the mineral extraction tax (MET, 7.7 trillion rubles). In second place is income tax (6.7 trillion rubles, +19.7%), most of which also goes to regional budgets. In third place is fully federal VAT (for this period - 5.7 trillion rubles, +10.47%).
The rapid growth of personal income tax is explained by the abnormal growth in income of the population against the backdrop of an acute shortage of personnel. In just 9 months, real wages in Russia increased by 7.4%, real disposable expenses of the population - by 4.8%. Wage growth is outpacing both GDP growth (according to the latest estimate, it should be 3.5%), and labour productivity growth, which, according to the official forecast, should grow by 1.7% this year - half as much as GDP and four times less than wages .
RBC analyzed the structure of personal income tax revenues by region. Nine out of ten leading regions increased revenues by more than 20%. The first place in growth (+23.8%) was taken by the Kurgan region, the backbone of which is Kurganmashzavod, the largest manufacturer of armored personnel carriers and infantry fighting vehicles in Russia. The top ten includes three more regions from among those that the Accounts Chamber classified as “specializing in the defence industry” - Chuvashia, Bryansk and Tula regions. These same regions are among the leaders in the growth of income tax revenues (Kurgan region and Chuvashia - 59% each, Bryansk region - 48%).
On December 1, the Finance Ministry presented a draft decree that would force the heads of Russia’s four most heavily subsidized regions, as well as the Russian-appointed leaders of the four occupied Ukrainian regions, to assume personal responsibility for reducing the gap between their region’s incomes and expenditures.
A passage outlining their obligations would be added to the agreements that regions make with the federal government about the provision of federal grants—the transfers that aim to reduce fiscal differences between poorer and richer regions. Crucially, in order to receive their grants, regions would have to promise not to inflate the number of state employees and officials, to increase their tax intake, and to closely coordinate with the federal Finance Ministry on the adoption of their 2025 budgets. Refusing to accept these terms by
54 RUSSIA Country Report February 2024 www.intellinews.com