Putin raises income tax from 13% to 15% for wealthy Russians on more than £58,000 to pay for coronavirus measures
- Putin said the tax increase would bring in 60billion roubles (£700million)
- It is the first tax hike on wealthy Russians since flat tax was introduced in 2001
- Russia faces its worst economic crisis since 2009 with a 5% slump in GDP
- Here’s how to help people impacted by Covid-19
Vladimir Putin has today announced a tax hike for Russia‘s top earners to fund the economic costs of the coronavirus pandemic.
The Russian president said the tax rate would rise from 13 to 15 per cent on incomes over five million roubles (£58,000) from January 2021.
The move is Russia’s first step away from a flat tax system which was introduced in 2001 during Putin’s first term as president.
Russia has finally seen a decline in its infection rate in recent days after weeks of stagnation, but the country faces its deepest recession since 2009.
Vladimir Putin (pictured) has today announced a tax hike for Russia’s top earners to fund the economic costs of the coronavirus pandemic
Russia has started to ease the lockdown this month with cafes re-opening and more exercise permitted in Moscow and other regions.
But the economic damage is already severe, with retail sales falling by 23.4 per cent in April during the first full month of lockdown.
Joblessness jumped to 5.8 per cent while GDP slumped by 12 per cent in April, its deepest fall since May 2009.
GDP is expected to shrink by five per cent this year even once economic activity starts to resume.
Russia has earmarked five trillion roubles (£58billion) to jump-start its economy through end-2021, its premier Mikhail Mishustin said earlier this month.
‘By the end of the recovery period we should achieve stable, prolonged economic growth above pre-crisis levels,’ Mishustin said, without giving details or figures.
Putin said in his televised announcement today that the tax hike would bring an extra 60billion roubles (£700million) into Russia’s budget.
Before the coronavirus crisis, Russian GDP was forecast to grow by more than three per cent in 2021-22.
Russia has started to ease lockdown restrictions as coronavirus cases gradually decline (pictured here are people sitting at tables on a pleasure boat in Moscow today)
The pandemic has dealt a serious setback to the economic and social policy goals Putin set out after his re-election in 2018.
Economic plans at a total cost of nearly more than £300billion through 2024 were intended to make Russian GDP growth exceed the global average by then.
Russia has piled up 599,705 infections in the world’s third-largest outbreak after the US and Brazil, although its death toll is comparatively low at 8,359.
The daily infection count hovered between 8,000 and 10,000 for 32 consecutive days from mid-May to mid-June but has now been in the 7,000s for the last week.
Meanwhile, the death toll yesterday fell below 100 for the first time since May 25, although it was back up to 153 today.
Putin’s tax proposal comes just days before the country is due to vote on constitutional reforms that could allow him to stay in power until 2036.
The 67-year-old would normally hit the limit of two consecutive terms in 2024, but lawmakers have backed a plan to reset the counter to zero so he could run again.
Putin previously served two terms from 2000 to 2008, then became PM before returning to the presidency in 2012 and winning a fourth term in 2018.