Will they increase income tax in 2018 in Russia?
Income tax is a direct way of redistributing material wealth as opposed to indirect fees (value added, sales, various excise taxes, duties, etc.). Income Russia must pay both individuals and legal entities. At the same time, legislation divides the taxation of the population, individual entrepreneurs and companies. The basic rate of income tax for individuals in the Russian Federation is 13%. It was introduced in 2001 and applies to almost all types of income of citizens, regardless of their size.
Income is not charged on:
- social benefits;
- scientific grants;
- some types of inheritance.
The taxation of incomes of non-residents (foreign citizens and stateless persons) is carried out in the Russian Federation according to separate rules.
Will the income tax increase in 2018?
The increase has long been discussed in the government of the Russian Federation and other authorities.There are two main points of view. On the one hand, many point out that it is not fair to impose on the same rate the super incomes of the rich and the minimum wage. In addition, it is claimed that the state needs additional funds to fulfill its social obligations (for medicine, education, etc.). Proponents of this approach also often point out that in most countries progressive income taxation is in place, and the rate of 13% is supposedly “the lowest in the world”.
In fact, in many foreign countries even lower basic income tax rates are applied. For example, in the US, the base rate for the population is set at 10%, and high rates (from 35%) apply only to individuals who receive annual incomes of 350 thousand dollars. At the same time, there is a system of numerous tax deductions (payment of interest on mortgage loans, expenses for education, treatment, etc.). The minimum income in the United States (about 9 thousand dollars a year per person) is not subject to federal fees at all. There are a number of countries and territories in which income tax is absent as such.Among them, for example, Bahrain, Cayman Islands, Monaco, Somalia and North Korea.
Opponents of an increase in income tax in Russia claim that ill-considered actions in this direction will only lead to an increase in social tensions in the country, as well as to a return to the practice of the 1990s, when the population was massively evading taxes. In addition, it is indicated that speculation on the theme of “social justice” is populism and hypocrisy. There are no guarantees that the state will spend additional funds on health care, education, etc. It is also extremely doubtful that the richest part of the population of Russia will pay a higher income tax. There are known ways to “optimize” taxation using foreign jurisdictions (the same Cayman Islands, etc.). Many wealthy Russians have dual citizenship, which makes it easier for them to legalize their income outside the country.
Notwithstanding the foregoing, an increase in income tax in Russia in 2018 is very likely. This is prompted by a significant deficit (excess of expenditure over income), which is characteristic of both the federal and most regional budgets.Borrowing funds in foreign markets for the Russian Federation is difficult because of the political situation. Under the most realistic scenario, the increase will occur gradually, so that the population has time to “get used to” the new rules. In particular, it is planned to change the base rate from 13% to 15%. In the future, this rate may increase to a level of 16-18%.
In the near future, Russians should also expect the introduction of progressive taxation of annual revenues in excess of 3 million rubles. In this case, experts close to the government of the Russian Federation call rates at 18% and even 25%. As a kind of "compensation", the state can exempt from fees those who receive the minimum income. From January 1, 2018 in Russia it amounts to 9,489 rubles per month, or approximately 114 thousand rubles per year. In addition, some reduction in insurance premiums paid by employers to various social state funds (Pension, Mandatory Medical Insurance Fund, etc.) is discussed. It is assumed that such a measure will be an incentive for employers to increase the salaries of their employees and compensate for the increased tax burden.
Previously, there was a “progressive taxation” in the country, in which the tax rate depended on the amount of income. Since high rates were set for any income exceeding the subsistence minimum, the actual collection rate of this tax was extremely low. The majority of the population preferred to receive their salaries in cash, without informing the government authorities about this. The introduction of a single, so-called. The “flat” rate contributed to the legalization of personal income in the “zero” years.