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Feb 19, 2021
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Tax Hike: Government Itches Hands

Tax Hike: Government Itches Hands

Photo: Artem Geodakyan / TASS

60% of Russians are ready to pay additional taxes to solve social problems. Such conclusions are contained in a recent study by the Higher School of Economics on how the country’s citizens support the increase in various items of expenditure.

It turned out that 65% of respondents supported the increase in health care costs, 13% more than in 2018. 54% support the growth of spending on education (+ 11%), 45% – on the payment of pensions (+ 4%). At the same time, the share of those who support growth in defense and security spending has halved to just 15% and 8%, respectively.

“60% of Russians surveyed agree to pay additional taxes and fees, which will go to specific programs under public control. The priorities here are still the same: improving the quality of medical care, social assistance and improving the quality of school education, ”says the HSE.

At the end of 2020, the Minister of Finance Anton Siluanov promised that the government does not plan to raise taxes in the new year. True, the authorities made the same promises in previous years, however, from January 1, 2019, the VAT rate was increased from 18% to 20%, and in 2020 it was announced the introduction of an income tax on interest on bank deposits, an increase in personal income tax for secured Russians, increasing the severance tax for metallurgists and fertilizer producers, canceling some of the benefits for oil workers and a number of other measures. All this, according to the Ministry of Finance, will amount to 2 trillion. rub. for three years.

In addition, back in December 2020, during parliamentary hearings, other ways to increase tax revenues to the budget were discussed, and they mainly concerned ordinary Russians. Parliamentarians and economists suggested increasing VAT again, monitoring e-wallets and bank accounts of Russians, comparing the value of property and income and identifying those who evade taxes.

Economist Nikita Maslennikov believes that this year the base tax rates will not be raised, but a pinpoint “twist” in favor of the increase is quite possible.

– Government represented by the State Secretary of the Ministry of Finance Alexey Sazonov has already answered the question of what will happen to taxes this year. Speaking at the Gaidar Forum in January, he said that the state currently has no opportunity to reduce taxes, but it does not intend to increase the fiscal burden either, because neither the economy nor citizens are ready for additional increases. We are not talking about an increase in base tax rates in the near future. Nevertheless, some point twists and adjustments upward are possible, both for the population and for business.

For example, this year the tax burden for oil workers has been significantly increased. This is offset by new benefits for hard-to-reach deposits, but so far the balance is in favor of the state.

So the government will keep taxes at a stable level, but within this stable level, point increases or additional charges are possible. Like an increase in personal income tax by 2% for people with incomes over 5 million rubles a year, which are planned to be sent to a fund to help children with orphan diseases.

But mainly the trajectory of the tax burden will depend on the revision of tax incentives. The Ministry of Finance and the Federal Tax Service will assess which benefits work and are effective, and which do not. All fiscal benefits in our country amount to at least 3.5 trillion rubles a year. These are lost budget revenues, so you need to figure out what gives the result, and what is just smearing money on a plate. But if some benefits are canceled, this will lead to an automatic increase in the tax burden.

“SP”: – The emergence of such studies can not prepare the ground for new decisions in the tax area?

– It seems to me that this study is a consequence of the position of the HSE experts that it is necessary to increase personal income tax to solve the problems of poverty in the country. In particular, many analysts are confident that sooner or later Russia will have to move to a progressive taxation scale.

As for the increase in spending per se, the situation in which health care and education find themselves shows that additional funding is needed. Even by cutting benefits, up to a trillion rubles could be found to be spent on health care and education. But for this it is necessary to revise the entire structure of government spending, and this is unlikely to be done earlier than at the end of this year. Now, first of all, the sources of these funds are important.

Apart from the revision of expenditures, the second and principal source of these funds is the acceleration of economic growth. I would not get hung up on tax twists. Taxes are like slicing a pie. If this pie was larger, then the pieces would be more solid. And if it only shrinks, then raising taxes will not help, even if the population is ready to pay more. It is necessary to ensure economic growth through investment, increased productivity, and so on, which ultimately leads to an increase in both income and tax deductions.

Deputy of the Saratov Regional Duma from the Communist Party of the Russian Federation Nikolai Bondarenko believes that a new round of tax increases is inevitable, but doubts that the population is ready for it.

– According to Rosstat and independent sociologists, almost half of the country’s citizens live on incomes of about 15-20 thousand rubles a month. What kind of tax increases can we talk about for people who cannot meet their basic biological needs and acquire the most necessary things?

If we talk about business and production, it is obvious that tax increases in any form will affect the cost of goods for the final consumer, because stores shift all these costs to the buyer. Small and medium-sized businesses are already in a deep crisis and tax increases will be critical for them.

“SP”: – Could such a survey be an attempt to prepare public opinion for the next tax increase?

“Maybe I don’t doubt it at all. This is the government’s favorite tool – to throw in various news feeds and watch how the people perceive them. I am one hundred percent sure that taxes will continue to be raised. Now there are several working groups under the State Duma that are discussing not only an increase in the tax burden, but also a reduction in state support up to the second wave of raising the retirement age.

“SP”: – How can you assess the fact that people are more willing to pay for health care and education than for defense and security?

– The main reason for this trend is the decline in the quality of services provided in the health care and education systems. The process of optimizing and systematically reducing costs for these strategic areas is reflected in the very possibility of implementing these services.

For example, the Constitution says about the right to free and affordable healthcare. In fact, due to the reduction of every second hospital over the past 20 years, the queues for the same narrow specialists reach such sizes that people cannot exercise this right, they have to go to paid clinics.

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