In order to pay for the continuing war against Ukraine, the Russian government is forced to raise revenue with higher tax rates. But the tax increases tend to favor the wealthy.
June 1, 2024
Moscow is short of cash. The Russian Ministry of Finance has now presented the main points of a planned tax reform. It includes an income tax hike for high earners, with the maximum rate going up from 15 to 22 percent, and an increase in corporate tax rate from 20 to 25 percent. There will also be no more exemptions for VAT. Is the reform the “adjustment for fairness” it claims to be?
Superrich getting off lightly
The plan is socially unjust, argues journalist Sergei Yezhov in a Telegram post picked up by Echo:
“A higher tax rate [more than the standard 13 percent] will be introduced for those earning 200,000 roubles a month [approx. 2,000 euros]. People with that kind of salary can hardly be described as very wealthy in Moscow. So the idea is to cash in on this class with a small surplus, while oligarchs find ways to optimize their taxes… In addition, only salaries will be taxed at relatively high rates, whereas dividends are only taxed at 15 percent. So company owners will pay less than their employees – what an absurdity… This is what this ‘progressive taxation’ looks like. And there’s no minimum below which income is tax-free. Not even the poorest will be exempt from this burden.”
Footing the bill for the war
In a Facebook post, political scientist Ilia Matveev sees the Russian war economy reaching its limits:
“The main measures include increasing VAT and corporation tax. Hence, the population and companies will continue to finance the war. The question is whether the defense industry can bolster the civilian sectors (true ‘military Keynesianism’). But Russia has reached its limits in terms of reducing unemployment, utilising free production capacities and general synergies between the civil and military sectors. The military sectors are already growing while the civilian sectors are stagnating.”
https://www.kyivpost.com/post/33567
“The question is whether the defense industry can bolster the civilian sectors (true ‘military Keynesianism’).”
I don’t think that mafia land can create an economy with true military Keynesianism.
A major part of its economy, which is smaller than Italy’s, by the way, is one of exporting natural resources, with a very limited part being one of producing goods. Those produced goods are in large part of military nature, which, ironically, mafia land can’t afford to export, and thus can’t generate income as it did before the war. Add to this the reduction of revenues from its sale of fossil fuels through Ukraine’s attacks on refineries and oil storage complexes. An important feature that should always be included in a calculation regarding anything in mafia land is corruption, which further erodes any efforts to boost the trash country’s economy. Even the fairly weak sanctions are helping to whittle away at the soft stick that is the mafia economy.
So, the mafia regime has very limited choices, and one of them is increasing taxes. I wish lots of fun for the roaches in financing their war. This isn’t the first tax hike, and it won’t be the last.
russia have posted a $2 billion trade deficit for each of the first 4 months of 2024. You can bet if russia posted these figures, they will be much higher. So essentially the Kremlin is paying for weapons that are getting destroyed in Ukraine, for no return whatsoever. Sooner or later, the war chest will be empty, then the real fun begins.
That’s why it’s so important for Ukraine to keep demolishing mafia refineries.
Just as Konstantin predicted. Once putler had the sham election out of the way, the gloves would come off. Inflation is already out of control in mafia land. This tax hike will just help it along. If you make nothing to sell, then sooner or later the money will dry up, and all your old customers will have found new suppliers, but putler the master strategist knows best.
No problem for mafia land. They’ll just print more toilet paper … err, money.
Unfortunately Ukraine will also raise the cost for power consumption. I don’t understand this since the West keeps sending money to keep cost stable.
I doubt the West are sending enough to keep energy prices stable, and money to repair destroyed infrastructure.
I thought Germany is sending billions to support Ukraine. 🤐
You mean like F16s and Czech shells? I don’t trust any of the claims made by the EU countries.
Fuck the EU and RuSSia! 🇺🇦✌️
It’s a sad development when their statements are as trustworthy as those coming from muscovy.
There is a difference between an intent and a deed.
It’s hard to keep down costs when your shit gets blown up, time and again.
The price of electricity in Ukraine has gone up to 0.1 euro a KwH. The price in the Netherlands is 0.34 euro a KwH. So it is still fairly cheap compared to Europe.