Russians Might Have to Open Their Wallets Wide, Experts Say on Mishustin Government’s Tax Initiatives

Russians Might Have to Open Their Wallets Wide, Experts Say on Mishustin Government’s Tax Initiatives


Information that the Russian authorities are going to once again dive into the pocket of an average citizen became known after the first reports on new tax initiatives of Mikhail Mishustin's government.

Meanwhile, the suppositions on the possible attempts to “get some more money from people” have already been voiced. For example, the very appointment of Mikhail Mishustin, the former head of the Federal Tax Service (FTS,) to the post of Prime Minister after the unexpected resignation of Dmitry Medvedev might be associated with this possibility.

Pensioners for Medvedev, Working Population for Mishustin

It is worth mentioning that Dmitry Medvedev, the former Russian Prime Minister, did his part. He took money from pensioners and added years in the workplace by freezing and subsequent reforming of the pension accumulation system, and then by implementing the pension system reform and raising the retirement age. After the authorities owned pensioners to the fullest, the time came for the economically active part of the Russians. It was under the pretext of “working” with this category of residents that back in January, some experts thought that the Cabinet had been handed over to Mikhail Mishustin, a well-experienced tax inspector.

It is noteworthy that the federal government was unable to immidiately start working in a new format because of the COVID-19 pandemic and the crisis triggered by the coronavirus.

Apparently, against the background of these issues, the federal government decided to postpone the implementation of the project on expropriation of money from the Russians “until better days.” However, it has already become clear that “the better days,” if any at all, might come very soon. However, the treasury needs money right here, right now. And it looks like that was why the Cabinet of Ministers was given the go-ahead.

The new fiscal initiatives of the government are still being talked about with caution, especially since they concern only those Russians whose total annual income exceeds 5 mln rubles ($63,950.) However, the target audience in this case looks very limited, and the largest amount of money is still concentrated in the hands of much poorer Russians. It will be simply necessary to increase not the quality, but the quantity by checking everyone on the subject side livings, hidden savings and other. Thus, even more than a month ago, there were the first alarming reports that the tax authorities had increased the number of inspections of people's bank accounts several times over.

People are new oil

Even then, experts say that this might be an attempt to establish strict control over the accounts of the Russians. Besides, at that time, the talk about the Russian authorities’ new concept sprang up anew. According to them, as hydrocarbons are rapidly becoming cheaper and are no longer able to fully cover the public expenses for social, infrastructural, military and other purposes, ordinary people are likely to become the new oil for the state.

These guesses are confirmed by the government itself. For example, not long ago, the Cabinet of Ministers made a proposal to give the employees of the Federal Tax Service more freedom to act and more opportunities to study data on the customers of financial institutions in the next three years. In addition, a provision for the extension of powers and rights of the Federal Tax Service is found in the draft of the “Guidelines for Tax and Budget Policy.” It was already submitted for consideration to the State Duma by federal officials.

For example, the document provides for expansion of opportunities for tax authorities’ employees to receive information from lending organizations. It is necessary for ensuring tax control and sending data upon requests of authoritative bodies. At the same time, the document does not specify what kind of information about the customers of banks and on what grounds the tax service will take interest in.

Additionally, the Cabinet proposes to fix the possibility of data exchange between the Federal Tax Service and the Central Bank at the legislative level. In this case, the regulator will have access to information that is a tax secret, and the Federal Tax Service will have access to bank secrecy which is still unavailable to it.

“Russians will Have to Open Their Wallets Wide”

Is it any wonder that, against this background, an increasing number of experts are beginning to state directly that the government wants to take away every last ruble from people? For example, according to Ilya Graschenkov, a political scientist and the head of the Fund for Elections Research, to drain the residents dry by imposing as many taxes as possible on the category of Russians who still have some savings is the main goal of Mikhail Mishustin's government.

“Officials have got down to tackling these savings,” Graschenkov said. “In this case, the FTS is the main tool. Investments, accounts, and deposits are becoming the sources where hidden money might be found. It can replace oil, the previous source of income. Of course, chances are this approach will quickly reduce the level of people' trust in banks, and they will begin to hide their money under mattresses. In this case, the tax inspectors will have to go door to door demanding that they hand over their currency, as in Bulgakov's novel ‘The Master and Margarita.’ However, these plans are most likely to become true in the future.”

These fears are also confirmed by Dmitry Salnikov, the head of the National Expert legal service. According to him, the tendency to strengthen tax control over the Russian residents has been observed over the past few years.

“Expansion of the powers of the tax service is sad news for those who live off unofficial incomes,” said Salnikov. “Tax authorities have long wanted to be given direct access to the data on people’s accounts. To my thinking, they might receive this access in the coming years. Most likely, there are still technical opportunities to implement these plans. However, the fiscal authorities are unable to develop activities precisely because of legislative barriers. Of course, the Russians will have to pay taxes on any unaccounted revenues they find.”

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