Russian President Vladimir Putin spoke on Tuesday to warn of the coming deep economic crisis, announcing further support measures but also raising the tax on high-income earners.
It was a first money knife with a single tax rate of 13% that Russia was proud of. Vladimir Putin announced on Tuesday, June 23, in a TV address that income above 5 million rubles (€ 64 240 at the current rate) will be taxed at 15% from 2021. He has also extended support and subsidies to households most affected by the economic crisis .
This high-income tax also comes a week before a constitutional referendum to allow him to remain in power after 2024. The president warned of the economic consequences of the pandemic, calling them “a serious challenge to Russia”.
“A global recession has begun, a fall in the global economy, whose consequences and depth remains to be determined,” he said.
Russia “saved tens of thousands of lives”
But the president also praised Russia’s performance for the epidemic: by quickly closing the borders, “saving the country precious time” and “saving tens of thousands of lives,” Vladimir Putin said. , which specifies that 17 million tests of Covid-19 had been performed. On June 23, the country recorded 599,705 cases and 8,359 coronavirus deaths.
The country explained its low mortality rates compared to Western countries in that it only counted deaths whose main cause, after autopsy, is coronavirus.
The country said at the end of May that it would revise its billing methods according to the recommendations of the World Health Organization, which require reporting of related causes or suspected cases. The Russian authorities also claim that the epidemic later arrived in Russia, the country had time to prepare its hospitals and develop a massive detection policy.
“Restoring the labor market in 2021”
On Tuesday, Vladimir Putin announced new subsidies and support for families and businesses affected by the financial impact of the pandemic. Faced with rising unemployment, he also instructed the authorities to “take all necessary steps to fully restore the labor market by 2021”, which led unemployment to its pre-crisis level.
The income tax reform, which is one of the most important sources of funding for the federal budget, is expected to raise another 60 billion rubles, the president said, adding that the money would be used to care for children with rare diseases.
The single income tax, introduced in 2001, was one of the most important reforms of Vladimir Putin’s first term in office. Its modification has been regularly discussed for several years, the hypothesis of deleting it or lowering it for low incomes has been raised.
The introduction of the individual tax “has taken wages and income out of the shadows, simplified and understood the tax administration,” the president says.
But with “the new quality of administration, the introduction of digital technology, it has become possible to distribute the tax burden in a more differentiated way,” he added.