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Ministry of Finance is discussing a rise of PIT rate up to 15%


MinFin, Ministry of Economic Development and the Center of Strategic Research of Aleksey Kudrin have discussed the options on tax maneuver. Economists agreed that tax burden has to be increased. PIT rate might rise but will remain flat.

In particular, according to the variant, suggested by MinFin, PIT should be increased up to 15%, from which 6-8% must be directed to the federal budget. Increase of income tax will be compensated by decreasing of employers’ tax burden — from 30% to 21% of insurance contribution rate.

Financial administration, according to one participants of discussion, will see how those different variants can be realized politically. For that might come handy various polls. In general, MinFin is against increasing total burden, final suggestions are not introduced yet, said a representative of the administration.

According to another variant, it’s suggested to raise PIT to 15% and implement a deduction, also make VAT equal 21% instead of current 18% and insurance contributions — the same 21%.

Other ideas were also discussed: implement adjustable PIT rate, give to the regions the right to implement their own rates, rise PIT up to 17% along with presenting a deduction (either to all or to the poorest citizens) on the subsistence level.

According to the paper, in fact, the suggested variants will make PIT rate progressive, because deductible minimal income might be implemented. Maneuvers under discussion in different variants can also lead to reduction of insurance contributions and VAT growth.

In the letter to Federal Assembly President Vladimir Putin authorized by December 2017 to prepare suggestions for Tax reform — as a part of series of reforms for speeding up economic growth in 2018-2024 years.

PIT is the key tax for regional budgets; for 11 years its share in their own income has grown from 29% to almost 38% in 2016. Revenues from PIT to the budget for the last year grew on 7,5%.

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