Academic journal article Asian Social Science

About the Progressive Tax System of Labor Remuneration in Russia

Academic journal article Asian Social Science

About the Progressive Tax System of Labor Remuneration in Russia

Article excerpt


This paper presents the results of research aimed at improvement of the taxation of wages in Russia. It analyses the problem of determining the progressive income tax scale as being a more socially equitable than the current flat rate in Russia with 13% tax rate on income. Proposed tax scale of tax rates exempts the poor citizens from income tax, shifting the tax burden from the poor to the rich. In accordance with the principle of redistribution that 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 personal income (referred to as PIT) is one of the main sources of budget revenues. Its share of the budget is directly dependent on the level of economic development. This is one of the most popular taxes in the world payable on personal 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 social justice of the tax. In other words, such tax is required, which would provide the maximum equitable redistribution of income with minimal damage to the interests of taxpayers from taxation. Analysis of tax on personal income shows that it, as well as the whole tax system in the Russian Federation is constantly developing.

Keywords: budget revenues, flat scale, income tax, income tax on individuals, a progressive scale, scale of tax rates

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1. Introduction

Currently, 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.

At the same time, 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 modern Russian system of taxation can be described as being unjust and does not resolve the task of the capturing of high and very high incomes of the individuals. Moreover, 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.

PIT is, perhaps, the most easily controlled tax by the tax authorities, it is rather difficult for taxpayers to evade it. The procedure for levying personal income tax is determined by the 23 chapter of the Tax Code and by the guidelines of the Federal Tax Service. Chapter 23 of the Tax Code was introduced by the Federal Law from August 3, 2000 No 118-FZ. PIT has replaced the income tax that was levied for 11 years at progressive rates.

This tax has a pronounced proportionate nature, which violates the principle of fairness in taxation, but with the introduction of a flat income rate tax revenues have increased. The main purpose of the introduction of personal income tax in Russia was the need to ensure the withdrawal of a significant amount of shadow income.

Despite the recent progress in the withdrawal of salaries out of the shadows, their volume remains significant, undermining the viability of the pension system. …

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