In her interview to the Govorit Moskva Radio Station, Yelena Minina, Senior Researcher of the Fiscal System Development Department, Gaidar Institute commented on the initiative of Mikhail Shapov, State Duma Deputy to increase taxes for individuals who own several real estate properties.

Russia may increase taxes on individuals who own over 100 sq. meters of real property. Also, the tax rate is proposed to be raised for those who are registered owners of several apartments. This initiative is expected to increase budget revenues and not affect the well-off.

Yelena Minina believes that before the initialization of this proposal it is necessary to upgrade tax management instruments, namely: to lay a personal income tax on taxpayer’s additional income from real property leasing, having initially identified such rental incomes.

“If an individual owns several apartments, it does not necessarily mean that he/she lets them out on lease, so it would be unjust to lay a higher tax. The owner of the property or his/her adult child may live there, for example. Also, parents may buy a real property for their child in advance. In my view, personal income tax should be charged only from rental income,” Yelena Minina noted.

Under this initiative, such incomes are proposed to be taxed on the basis of cadastral values, rather than the personal income tax rate. However, the higher the cadastral value, the higher the tax. Yelena Minina believes that selective taxation is unjust.

“Property tax is related to local taxes and set in regions and cities of federal importance – Moscow, St. Petersburg and Sevastopol – by the RF Tax Code and laws on taxes and duties of the specified constituent entities. Tax rates vary across regions. For example, in Moscow tax rates on non-commercial

property depend to a great extent on the property value. In practice, a residential property value correlates directly with the property’s floorspace. Tax conditions may differ for various taxpayers and selective taxation is inadmissible,” Yelena Minina summed it up.