Page 28 - RusRPTOct20

cover the additional RUB4 trillion ($52bn) spent in 2020 to combat the pandemic and deal with falling oil prices. So, the government has adopted a benign sounding ‘revenue mobilization program’ to generate at least $20bn a year from new taxes.
Two categories of taxpayer will face the biggest bills — big business and high net worth individuals. Oil companies will lose some subsidies and face an annual tax hike worth about $5bn, while the chemical and metals sectors will see extraction taxes rocket more than threefold. Individuals with an annual taxable income in excess of RUB5mn ($65,000) will see their income tax bill go up two percentage points to 15%, while interest on bank accounts with more than RUB1mn ($15,000) will also see higher taxes. Entrepreneurs working in offshore jurisdictions like Cyprus will face a sharp increase in dividend tax — from 0.5% to 15%. And, finally, the state will impose the biggest ever rise in excise duty on cigarettes — up by 20%.
The biggest beneficiaries of these measures should be small and medium-sized businesses and Russians on low incomes. The Bell​ calculated earlier this year that it was these sectors that received the most money from the government’s anti-crisis program. But officials — from Putin downwards — have made it clear that this is not a one-off: tax reductions for small and medium-sized businesses will be permanent.
Taken together, all these measures amount to a new form of economic policy. Much of it seems to be a response to leading Kremlin ideologue Vyacheslav Volodin, the current parliament speaker. His call for “social justice” first appeared​ in 2019 as part of a program that paved the way for the constitutional reforms that ‘reset’ Putin’s term count, allowing him to rule through 2036.
But other influential officials have been talking about similar ideas. Earlier this month, we saw a raft of proposals to help the poor: ex-Prime Minister Dmitry Medvedev ​suggested​ a Universal Basic Income, and senior banker Andrei Kostin proposed a “negative income tax” for those earning the least. This week, the government implemented new rules for calculating the minimum wage, a long overdue overhaul of a system unchanged since 1997. This will help address income inequality but will take $6bn a year from the budget by 2025. That list of new taxes on the rich may not be finished just yet.
State media have presented the new measures as a tax on oligarchs and rich Russians who syphon their funds offshore. That’s partly true, but it’s not the whole story. For example, a tax on bank deposits worth 1mn or more would affect 55% of all bank accounts in the country (a million rubles is a relatively normal level of savings for someone who enjoys a good pension).
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28 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com