Putin Plans Tax Hikes for Wealthy

The number of Russians living in poverty has increased by two million people, says the state statistics agency Rosstat. Every eighth person in Russia is poor. This is a staggering development, taking into account that in the first half of 2011 prices of oil and raw materials, the main sources of the country’s revenue, were exceptionally high.

Moreover, according the Rosstat’s data, the per capita income grew by 14%. This suggests that the ranks of the poor are rapidly replenished by the middle class. Meanwhile the rich get richer.

Last Saturday Vladimir Putin said that he would impose higher taxes on wealthy if elected to a third term as president next year.

‘Taxes for people with high incomes, for the rich - and we have more and more of these people - should be higher than for the middle class, the majority of citizens,’ he said.

It seems, however, that foreigners working in Russia have nothing to fear. Higher taxes for the wealthy will fall ‘primarily on consumption, real estate and property’, said Vladimir Putin. Russia should keep its flat 13% income tax rate because such tax is easier to collect, he added.

Putin also said that taxes for companies that exploit natural resources and sell raw materials should be higher than for companies engaged in innovation, building new plants or manufacturing.