NATALIA KORNIENKO: “PROGRESSIVE TAXATION WILL DEPRIVE TREASURY OF INCOMES”

The article in the “Kommersant” cited that flat PIT rate survived 20 years in Russia. However, on the President’s initiative, those receiving over Rub 5 million per year will pay 15% from part of their earnings as from January 1. Although, the experts of HSE suggested to increase the tax for the wealthy up to 20% for incomes over Rb12 million, and for those having an income exceeding Rb24 million, to pay back 24% to the state.

Natalia Kornienko, Head of Tax System Development Department at the Gaidar Institute, believes that "it is not difficult to predict how wealthy Russians will behave if they are obliged to give a quarter of their earnings, and as a result, the budget will find missing even what they have now."

“The richer the people, the easier it is to avoid paying taxes, they can turn these incomes into something else rather than wages, and finally, we will fall short of enormous revenues from personal income tax. We still possess certain unrealized measures that could increase budget revenues without such losses”, said Natalya Kornienko.