Vladimir Putin is reportedly considering significant tax increases for Russians as the Moscow government struggles to secure sufficient funds for its military operations in Ukraine.
According to Bloomberg News, the Kremlin is contemplating raising taxes on corporate profits and high-income individuals to generate up to four trillion roubles (£34 billion).
Plans include increasing personal income tax from 15% to 20% for earnings exceeding five million roubles (£43,000), and raising corporate tax from 20% to 25%.
Currently, Russians are taxed 13% on annual incomes up to five million roubles, with a higher rate of 15% on incomes above this threshold. The proposed changes would reduce the 15% threshold to one million roubles and hike the rate to 20% for incomes over five million roubles. This adjustment would move a larger number of Russians into a higher tax bracket.
Putin has expressed his intention to reform the Russian tax system as he prepares for another six-year term following the country’s elections this week.
These developments occur as Moscow has had to increase its defense spending to 8% of its GDP, reminiscent of the Soviet Union era, in the face of significant personnel and equipment losses as the conflict in Ukraine reaches a deadlock.
Simultaneously, revenues from oil, gas, and coal have decreased from $40 billion (£32 billion) a month in early 2022 to $23 billion in January this year.
