Economics Ministry Wants Payroll Tax Cut

Russia’s Economic Development Ministry has proposed cutting the nation’s payroll tax from the current 30 percent to 26 percent, Minister Elvira Nabiullina said on Thursday.

“We are discussing rates [of the payroll taxes] and we think that the tax should be lower than 30 percent,” Nabiullina told reporters.

The government plans to cut the payroll tax, Russia’s main tax for companies, after boosting it from 26 percent to 34 percent in 2011. The Russian government had hoped to bring in 700-800 billion rubles ($23.33-26.66 billion) as a result of raising the tax, as the country faces a strong rise in social spending from this year.

Experts claim the higher payroll tax led to lower competitiveness of Russian products and a growth in shadow wages, so the government received less revenue in 2011 than it expected.


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