About the Progressive Tax System of Labor Remuneration in Russia

Marat Y Ibragimov,Aidar M Tufetulov,Yuliya M Sinnikova,Rustam M Ibragimov

doi:10.5539/ass.v10n23p28

Abstract

This paper presents the results of research aimed at improvement of the taxation of wages in Russia. It analysesthe problem of determining the progressive income tax scale as being a more socially equitable than the currentflat rate in Russia with 13% tax rate on income. Proposed tax scale of tax rates exempts the poor citizens fromincome tax, shifting the tax burden from the poor to the rich. In accordance with the principle of redistributionthat leads to a reduction in income inequality in Russia.The most important source of budget revenues are taxes. In Russia, as in most countries, the tax on personalincome (referred to as PIT) is one of the main sources of budget revenues. Its share of the budget is directlydependent on the level of economic development. This is one of the most popular taxes in the world payable onpersonal incomes. PIT is linked to consumption, and it can either stimulate consumption or reduce it. Therefore,the main challenge of income taxation is to achieve optimal balance between economic efficiency and socialjustice of the tax. In other words, such tax is required, which would provide the maximum equitableredistribution of income with minimal damage to the interests of taxpayers from taxation. Analysis of tax onpersonal income shows that it, as well as the whole tax system in the Russian Federation is constantlydeveloping.

Highlights

The tax charged on the physical persons or the so-called income tax is one of the major economic “levers” which allows the state to solve various social and economic problems of the society
The flat scale of the income tax of individuals, which currently exists in Russian Federation is, in our opinion, not socially oriented and in accordance with the redistribution principles leads to the growth in inequalities of the income of the citizens
The rejection to use progressive taxation scale which is widely used throughout the world, in Russian Federation was guided by the decision to get the income of the citizens out of the shadow economy, but in practice it has demonstrated absolutely opposite effect

Summary

Introduction

The tax charged on the physical persons or the so-called income tax is one of the major economic “levers” which allows the state to solve various social and economic problems of the society. Similar to Russian Federation, this tax is one of the sources of income which form the state budget of the majority of the foreign countries. In accordance with the world income tax practices, income tax on individuals under Russian conditions does not resolve the tasks of gaining economic efficiency and social justice at a full effect. The flat scale of the income tax of individuals, which currently exists in Russian Federation is, in our opinion, not socially oriented and in accordance with the redistribution principles leads to the growth in inequalities of the income of the citizens. The rejection to use progressive taxation scale which is widely used throughout the world, in Russian Federation was guided by the decision to get the income of the citizens out of the shadow economy, but in practice it has demonstrated absolutely opposite effect. The implemented flat scale of taxation have led not to the resolution of the problems related to the shadow economy, but have resulted in incomes being concealed at even a greater scale

Methods

Results

Conclusion