Putin Announces Tax Hike For High Earners Ahead Of Constitutional Vote

Russian President Vladimir Putin has proposed raising income tax on high earners as of next year, as he laid out measures to tackle the economic fallout of the coronavirus pandemic.

Putin made the announcement in an address to the nation on June 23, a week before the country is set to hold a national vote on controversial amendments to the constitution that would open the door for the Russian leader staying in power until 2036.

The president proposed that the tax be raised by 2 percentage points to 15 percent for annual personal income that exceeds 5 million rubles ($72,700) starting January 1, 2021.

The hike would give the state treasury an extra 60 billion rubles ($864.6 million), Putin said, adding that the money raised from the new tax rate could be used to treat children with “severe, rare diseases.”

The current 13 percent income tax was introduced during Putin’s first presidential term in 2001.

In his televised speech, Putin promised that subsidies to families with children and other categories of the population introduced during the coronavirus pandemic will be extended.

He said 10,000 ruble ($144) allowances paid in June to families with children under 16 will be extended to next month.

He said the government will also continue in July and August to provide financial support to citizens who were left without work during the outbreak, and that a program of subsidized mortgage rates to make new housing more affordable will also be extended.

The president also proposed cutting taxes on profits for IT companies from 20 percent to 3 percent.

Russia has reported nearly 600,000 cases of the coronavirus, the world’s third-largest caseload.

The country has largely ended its lockdown, but the crisis is expected to cause a 6 percent economic contraction this year.

Putin ended his address by calling on Russian voters to take part in the national vote on proposed constitutional changes scheduled for July 1.

If approved, the reform would mean the 67-year-old former KGB officer could run for two further six-year terms, if he chooses, after his current term ends in 2024.

Putin has served as Russian president or prime minister since 1999.