The optimal mechanisms for withdrawing excess income are the use of taxes tied to physical indicators, as well as one-time payments. State Secretary and Deputy Minister of Finance Alexey Sazanov spoke about this in an interview with Vedomosti.
“The optimal mechanisms for its [ренты] exemptions that are practiced all over the world are the use of other taxes tied to physical indicators, such as mineral extraction tax (in the case of natural rent) or excise tax (in the case of economic rent), and there are also one-time exemptions,” he said.
The Ministry of Finance actively practices both mechanisms, he recalled. In particular, an excise tax on steel was introduced last year, and a one-time excess profit tax was introduced this year.
At the same time, introducing a progressive scale of income tax to equalize margins between industries is not effective, Sazanov believes.
This does not create a sustainable additional source of budget revenue, but leads in the medium and long term to inflated expenses, fragmentation of business, and erosion of the tax base, he noted.
“In general, it forces company managers to spend their time and talent not on creating added value for the country, but on developing tax optimization mechanisms,” said the deputy minister.
This year, the authorities decided to seize the excess profits of Russian companies received over the past years, using the so-called one-time payment or windfall tax.
According to the law, the tax rate is set at 10% of the excess profit for 2021–2022. above the same indicator for 2018–2019. Moreover, if the tax is paid from October 1 to November 30, 2023, the business will receive a “discount” and the rate will be reduced by 2 times – to 5%. The Ministry of Finance plans to collect 300 billion rubles from business. As First Deputy Prime Minister Andrei Belousov reported at the end of January, the idea of the tax arose due to the fact that many companies’ financial results last year “were strongly positive.”
The discussion on the introduction of a progressive scale for income tax was actively conducted in 2021. Then the authorities proposed establishing three levels: 20%, 25% and 30%. The rate was tied to dividends and investments (their value was determined by depreciation for the period). The higher the dividends, the higher the income tax should have been. But in the end no decision was made.