Progressive personal income tax scale to be implemented in Russia

The Russian government is considering a progressive personal income tax scale, the Russian Deputy Prime Minister Olga Golodets said.

“I think that in order to alleviate poverty, an income tax exemption on the lower bracket of scale is one of the crucial steps. We have calculated this measure and are discussing it today,” PRIME cited Golodets as saying.

Russian Finance Minister Anton Siluanov said earlier that changing this system for a progressive scale is unfeasible until after 2018.

On January 1, 2001, a 13% flat tax on personal income took effect in Russia.

The professor of the Department of International Business at the Graduate School of Corporate Management of RANEPA, Lyudmila Dukanich, speaking with a correspondent of Vestnik Kavkaza, said that any civilized country needs a progressive type of personal incomes tax system, because it is more fair.

According to her, all countries address a range of social problems through a progressive tax system. First of all, it is a sharp differentiation of the population by income level. "A flat tax which exists in today's Russia, to some extent even contributes to the fact that now the average income of Russia's richest people officially is 14 times greater than the income of the poorest, the expert explained.

Dukanich recalled that there was a progressive tax in Russia prior to the introduction of a flat one, when the country switched to the rate of 13%, and this transition was seen as a temporary measure back than.

Thus, she pointed out, that it if a justified level of non-taxable minimum, which exists in almost all civilized Western countries, is approved, the problem of income gap between the rich and the poor will become less acute.

The professor noted that the introduction of the new system will have no effect on the federal budget. "Despite the fact that the personal income tax is federal, 100% of proceeds from this tax remains in the regional budget. And each subject of the federation distributes them according to their reasons," the economist said.

According to the expert, as a result of the establishment of a progressive scale, the income level, which is considered the minimum necessary for a subject and his family to survive, will be a limit for determining non-taxable categories of the population, Lyudmila Dukanich concluded.