Russian Tax System Re-Enforcing Income Inequality, Moscow Experts Say

Paul Goble

            Staunton, Jan. 19 – Scholars at the Moscow Institute for Economic Predictions at the Russian Academy of Sciences say that the current tax system in the Russian Federation is re-enforcing rather than helping to overcome the enormous income inequality among residents of that country.

            The issue has come to the fore as a result of discussions as to whether and by how much the Russian government should increase taxes to overcome the budget deficit that emerged because of the war in Ukraine and that threatens to grow larger in the year ahead, Anastasiya Bashkatova of Nezavisimaya gazeta says (ng.ru/economics/2023-01-17/1_8636_taxes.html).

            According to the Institute’s experts, the tax burden on Russians at the bottom of the economic pyramid is as almost as high as on those at the top because while income taxes are far higher on the latter than the former, consumption patterns mean that those in the former pay many other taxes at a far greater rate than those at the top.

            Consequently, the real tax burden under the existing system in percentage terms is almost as high among the poor as it is among the rich, something that does nothing to lessen income inequality and that in fact has the effect of reproducing the existing divide year after year, regardless of what many believe and say they want.

            That needs to be taken into consideration in any discussion of how to increase taxes so that a boost in income taxes won’t have the effect of making the tax system as a whole fundamentally regressive, the experts say.