NATALIA KORNIENKO: “THE IDEA OF INCREASED TAXATION WILL UNDERMINE THE REMAINING ACTIVE ECONOMIC AGENTS”
The Government has returned to the idea of charging an increased tax rate from the well-off Russians. The authorities consider an option of increasing the individual income tax rate from 13% to 15% for wealthy Russians. Also, it is reported that the increased tax rate may be applied to individuals’ annual income of Rb2-3 million.
In her interview with “The Insider” online media, Natalia Kornienko, Head of the Tax System Development Department, Gaidar Institute assessed the implications of a tax increase for the high-income Russians.
“Are persons with the annual income of Rb 2-3 million considered to be rich? To a large extent, they are mid-ranking managers who work without holidays and have to be available for calls 24hrs a day. In large cities, the work load on this stratum is the highest one because such managers are actually responsible for everything. For example, if they had a monthly income of Rb 1 million, one could speak about a tax on the rich, then. I believe this measure will undermine the remaining active economic agents which managed to stay afloat and continued to operate during the lockdown. Taking into account the fact that according to the head of the state the WHO is expecting the second wave of the coronavirus outbreak in the autumn, such an initiative may just ruin the middle class altogether. At present, the middle class is striving to survive and create jobs for the others. This proposal demonstrates a rather tough attitude to the population.
At present, concrete assessments of the state of the economy have already been made and it is known which number of small and mid-sized businesses has closed down or is on the verge of bankruptcy. But it is not so important to speak about the current situation. If the second wave does not break out, we shall see the actual extent in the autumn. There are enterprises which are striving to survive. They borrow from other sources and activate internal resources. The actual losses will be seen later,” Natalia Kornienko noted.
“Are persons with the annual income of Rb 2-3 million considered to be rich? To a large extent, they are mid-ranking managers who work without holidays and have to be available for calls 24hrs a day. In large cities, the work load on this stratum is the highest one because such managers are actually responsible for everything. For example, if they had a monthly income of Rb 1 million, one could speak about a tax on the rich, then. I believe this measure will undermine the remaining active economic agents which managed to stay afloat and continued to operate during the lockdown. Taking into account the fact that according to the head of the state the WHO is expecting the second wave of the coronavirus outbreak in the autumn, such an initiative may just ruin the middle class altogether. At present, the middle class is striving to survive and create jobs for the others. This proposal demonstrates a rather tough attitude to the population.
At present, concrete assessments of the state of the economy have already been made and it is known which number of small and mid-sized businesses has closed down or is on the verge of bankruptcy. But it is not so important to speak about the current situation. If the second wave does not break out, we shall see the actual extent in the autumn. There are enterprises which are striving to survive. They borrow from other sources and activate internal resources. The actual losses will be seen later,” Natalia Kornienko noted.