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Billionaire tycoon backs tax increases

Higher taxation of the better-off is fair and long overdue, Russian businessman Alisher Usmanov says

Increasing taxes for Russians with high incomes would be a fair and long-overdue decision, Russian metals tycoon Alisher Usmanov has said, and other wealthy compatriots of his agree.

On Tuesday, the Russian Ministry of Finance submitted to the government a package of amendments to the country’s tax system which includes new tax thresholds for those earning over 2.4 million roubles ($26,800) and a hike in corporation income tax. The changes are expected to add some 2.6 trillion rubles ($29 billion) a year to the country’s coffers, according to the ministry’s calculations, as cited by Interfax.

On Monday, Usmanov, an Uzbek-born billionaire, had stated that tax increases would help Russian authorities to solve a wide range of social tasks that were set, “the volume of which grows along with the economy and level of well-being.”

The billionaire holds a major stake in USM, a Russian investment group with holdings in Metalloinvest, one of the world’s largest iron ore producers, and telecommunications company MegaFon. Usmanov’s net worth totals $13.6 billion, according to Forbes.

“It will be fair if part of the [tax] burden is redistributed to citizens with high incomes without putting pressure on the broader population,” Usmanov said, according to a statement published by Metalloinvest.

Income tax at present in Russia amounts to 13% for the majority of Russians, with a 15% rate for earners of an annual income of more than $56,000. The finance ministry proposed to apply a 15% rate for annual incomes ranging from 2.4 million to 5 million rubles ($26,900 to $56,000). For income between the current equivalent of $56,000 and $224,200, the rate will rise to 18%. A rate of 20% will apply to taxpayers with an annual wage of between 20 50 million rubles ($224,200 and $560,600). For earnings exceeding 50 million rubles ($560,600), the proposed new rate would be 22%.

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FILE PHOTO: The building of the Ministry of Finance of the Russian Federation on Ilyinka Street in Moscow.
Russia poised to overhaul tax policy

During his annual address to the Federal Assembly in late February, Russian President Vladimir Putin proposed to explore the issue of updating the country’s fiscal system to provide a more equitable distribution of the tax burden.

In April, Russian Finance Minister Anton Siluanov announced plans for a public discussion on proposals to update the tax system. The minister stressed that changes would target those with higher personal or corporate incomes, while also pledging to close tax loopholes.

The tax reform has been supported by the CEO of national e-commerce giant Wildberries, Tatyana Bakalchuk, ranked by Forbes as the richest woman in Russia. The businesswoman said that increasing taxes for big businesses in Russia will help smaller companies to compete. Chief executive of Russian mining giant Norilsk Nickel Vladimir Potanin also backed reform of taxation, arguing that the tax-increasing mechanism is more effective than one-time payments that big businesses were obliged to make.

In 2024, Russia introduced a windfall tax on any businesses whose profits in 2021-2022 exceeded $10.5 million, charging 10% on any excess profits earned during that period. Companies established after 2020 and energy sector firms are exempt from this payment.

May 29, 2024 at 07:14PM

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