Natalia Kornienko, Head of Tax System Development Department of the Gaidar Institute, replied live on radio station “Govorit Moskva” to questions related to progressive taxation: how difficult it will be to administer personal income tax, whether changes will require additional reporting from individuals and how much it will cost to administer the changed tax.

“By all means, the introduction of a progressive taxation scale will create additional jobs in the tax service, because this will be a fairly large amount of taxpayers for million-plus cities. However, there are not so many people with this level of wages in all million-plus cities.

Therefore, it will be a new but not critical burden on administration on behalf of the tax authorities. I believe that one can easily arrange it from the technical point of view by creating other accounts, BCC. It remains only to automatically calculate the proceeds.

This innovation will not require additional tax returns from individuals. It will be sufficient to provide the same forms that are valid now. Today, we have lows, the starting points for the tax rate changes, and they are associated with contributions to funds. Absolutely any bookkeeping can easily cope with this after income exceeds a certain level. Moreover, it changes annually, but does not cause problems for anyone. I think that taxpayers will not face any difficulties in this regard, except for the fact of the tax rate growth.

In my opinion, the cost of tax administration will be high. The smaller the group, the more expensive the administration. It is necessary to set up a new software, new accounts, new accounting, that is, the larger the group, the cheaper. However, we do not know the costs to administer one taxpayer per year. This figure is secret behind seven seals.”