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deductions, but at a rate of 5% for income up to 250 million rubles and 7% for income from 250 to 450 million rubles.
The Center for Macroeconomic Analysis and Long-Term Forecasting (TsMAKP) rated the tax reform of the Ministry of Finance higher than the ministry itself. According to TsMAKP estimates, for 2025–2027, tax increases will increase GDP by 1 percentage point at the cost of business development. The center under the leadership of Dmitry Belousov, the brother of the former first deputy prime minister, did not assess the long-term effect of the tax reform.
The expansion of the progressive personal income tax scale and the planned tax increase will support economic growth and increase Russia's GDP by 1 percentage point. in the future 2025–2027, according to the CMACP study.
The center estimates additional budget revenues for three years slightly higher than the Ministry of Finance: 1.72 trillion instead of 1.4 trillion rubles from the increase in personal income tax, 5.61 trillion instead of 5 trillion rubles from income tax, 1.31 trillion instead of 1.1 trillion rubles from VAT.
The main tax burden will fall on business, which will lead to a decrease in income for entrepreneurs and a slowdown in private investment. The authors of the report estimate losses at 2.3 trillion rubles over three years - this is half of all additional revenues from increasing income taxes. The center explains the expected growth in GDP by the fact that the loss of private investment is compensated by 3/4 by public investment.
Dmitry Belousov emphasizes that the success of the reform depends on the “full and effective” spending of this money - it must return to the economy and be fully spent on the stated goals - supporting citizens and businesses, national projects, infrastructure. TsMAKP does not look beyond 2025–2027.
Economists at RANEPA and IEP assessed the long-term consequences of tax increases even before Vladimir Putin’s message in which he announced it. Experts came to the conclusion that the introduction of a progressive personal income tax will reduce GDP under any scenario, except if 13% is the ceiling and not the bottom of the tax scale.
As Kommersant notes, the authors of the new study themselves cast doubt on its optimistic conclusions, noting that the profits of even private companies are not always effectively transformed into capital investments, and completely exclude the possibility of growth in private investment under the influence of government investments in the infrastructure of the Center for Transport and Communications.
TsMAKP, whose forecasts the government listens to, is building an optimistic picture of the future of the Russian economy pumped up with money, which,
89 RUSSIA Country Report July 2024 www.intellinews.com