Russia Plans Tax Hikes on Businesses, Wealthy as War Costs Mount

Russia said it plans to raise taxes on businesses and the wealthy as its invasion of Ukraine puts pressure on government finances.

Bloomberg
First Published29 May 2024
Russia Plans Tax Hikes on Businesses, Wealthy as War Costs Mount
Russia Plans Tax Hikes on Businesses, Wealthy as War Costs Mount

Russia said it plans to raise taxes on businesses and the wealthy as its invasion of Ukraine puts pressure on government finances.

The Finance Ministry plan would introduce a new progressive income tax. In addition, the tax rate for corporate profits would rise to 25% from the current 20%, starting in 2025, Interfax reported. Extraction levies for iron ore, potash and phosphate fertilizers would also rise.

The entire package would raise an additional 2.6 trillion rubles in 2025, with over a half of that coming from higher corporate profits tax, according to Interfax.

The Finance Ministry said in a statement the proposals have been submitted to the cabinet and could win approval in the lower house of parliament before the summer recess.

The progressive personal income tax would affect about 2 million people, or 3.2% of total workforce, Finance Minister Anton Siluanov said in a statement. Rates would range from the current 13% for those earning up to 2.4 million rubles a year to as high as 22% for those exceeding 50 million rubles. 

Russia’s Post-Election Spending Sends Budget Into Deep Deficit

Russia has run a budget deficit since the end of 2022, a reflection of the steep costs of Putin’s invasion of Ukraine in February of that year. 

Spending on the Defense Ministry and Russia’s security sector is approaching 6.7% of gross domestic product, nearing levels reached by the Soviet Union at the height of the Cold War in the 1980s, Kremlin spokesman Dmitry Peskov said earlier this month, according Interfax. 

This article was generated from an automated news agency feed without modifications to text.

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