Dvorkovich does not rule out raising income tax in Russia

Dvorkovich does not rule out raising income tax in Russia

Russia’s Deputy Prime Minister Arkady Dvorkovich does not rule out raising income tax to more than 13%.

Addressing the  students of the Plekhanov Russian University of Economics today, he said that raising personal income tax up to 15% from the current 13% would not lead to tax evasion, additional 2% can be used for health care.

"The figure of 13% is not a fetish, it is not different from 14% or 15%," he said.

"If the new approaches are deemed fair, if there is consensus in the society, then it really makes sense. I do not see anything wrong with it, we have lived with a 13% tax long enough and if additional 2% are used, for example for health care, this will definitely be a plus," TASS cited Dvorkovich as saying.

Dvorkovich also said that the government opposes the Finance Ministry’s suggestion to complete the oil industry tax reform to reduce the chance of tax evasion, as well as introducing a progressive tax system.

Vedomosti business daily reported citing federal officials that an idea to raise the tax was discussed at the government meeting.

The vice-rector of the Academy of Labour and Social Relations Alexander Safonov, speaking to a correspondent of Vestnik Kavkaza, noted that the results of raising personal income tax for Russians depend on the distribution of their incomes. "In terms of the rich population, there is no difference between 15% and 13%, but when we talk about the poor population, which is almost 22 million people, an increase in personal income tax by 2% will become quite serious for them. Thus, there is a key question of what kind of tax-free minimum income will be considered by the government. If it is a minimum wage, it will affect 5 million people whose incomes are much lower than the rest of the population. For others the tax burden will increase, which will disperse inflation," he stressed.

Alexander Safonov called for introducing a progressive tax system. "A flat income tax rate is applied only in non-developed countries, there are 33 such countries. We have a constantly growing income differentiation, which means that it is worth seriously thinking about the personal income tax with at least three levels: a non-taxable minimum, an average minimum for salaries of 25 thousand rubles per month and an increased level for those who have, for example, over a million rubles of incomes per year," the expert pointed out.

"A non-taxable minimum is a prerequisite for all these changes, since it is simply ridiculous when a person receives a minimum wage, which corresponds to the subsistence minimum now, and after deducting tax real incomes are below the subsistence minimum," the vice-rector of the Academy of Labour and Social Relations said.

The Head of the Department of Management Graduate School (VSHGU) at RANEPA, Ilya Bykovnikov, in turn, agreed that raising income tax will be inconspicuous for all categories of citizens. "If the non-taxable minimum is raised, Russians with incomes below the average will have a longer period of time and a greater opportunity to receive income before they are taxed at an increased rate. By the way, Dvorkovich only confirmed that the discussion is underway, but he did not say that the bill has already been prepared. It is known that the authorities gave guarantees that there will be no changes in the personal income tax scale or the withdrawal mechanism before 2020," he said.