Lev Shlosberg: On Vladimir Putin’s second tax reform and who is going to pay for what 

3 June 2024

Source: Facebook

Vladimir Putin is implementing the second tax reform of his presidency. The first came at the very start of the century (literally, 1 January 2001) and was marked by an easing of the tax burden, first by introducing a flat income tax scale that helped legalize billions in shady income and multiply the revenues to regional and local budgets. Putin’s first tax reform could be called liberal.

More than 20 years have passed, and the approach has undergone a cardinal change. Now the authorities’ main objective is to extract as much money as possible from as many of the most different revenue streams as possible—both citizens and organizations. The new tax reform includes no support for freedom of economic activity. Instead of creating the conditions for freeing up economic forces, the reform creates the most contrived conditions possible for extracting as much money as possible for the budget—the federal above all—in the form of taxes. The new reform’s only beneficiary is the state.

Right now, according to various assessments, as much as 40% of the federal budget is being spent on military and military-adjacent objectives. The federal budget is the main war chest and requires daily feeding—money, money, and more money. A wartime economy is taking shape in Russia, and for a long time to come.

To give the reform a dash of fairness, its plan includes several tax maneuvers and exemptions for small and mid-size businesses that use the simplified taxation systems, as well as for families with multiple children. There are concerns that on the path to applying these exemptions bureaucratic procedures will be put in place that are more expensive to overcome than the payments themselves.

We will discuss Vladimir Putin’s new fiscal reform and its effect on the Russian economy and Russian society live on 3 June at 19:00 on Grazhdanin TV. Tune in. This is important for each of us. 

Translated by Marian Schwartz

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