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Cars, boats and homes to get Russian luxury tax

Cars, boats and homes to get Russian luxury tax
Russia won’t introduce a separate luxury tax, says Finance Minister Anton Siluanov. But the country’s rich don’t get to breath easy. He suggests it should be levied through existing taxes, specifically for real estate and vehicles.

Financial assets and yachts could also fall a subject to a “luxury tax,” Siluanov said.

The minister does not rule out that the real estate tax may have "a progression depending on the real estate market cost," which will be sometimes revised.

However, should Russia decide to introduce the real estate tax, that’ll be done from 2013. "We still have time to work on the question," Siluanov continued.

Premium class vehicles are also planned to be charged extra.

“We could introduce multipliers for vehicles with bigger engines, and more horse power respectively,” he suggested.

Andrey Goltsblat, a managing partner at Goltsblat BLP, says increasing existing taxes would be more reasonable.

“If you need to collect money and meet the budget, just introduce the new property tax, increase the rates somehow or introduce a progressive scale for a personal income tax, which is flat now,” Goltsblat told Business RT.

Finance Minister Siluanov says everything is currently up for grabs and all kinds of additional ‘vanity charges’ are being discussed.

This all comes as a part of a “tax manoeuvre,” initiated by the Russian Government. It basically aims to make Russia more investor attractive by increasing taxes on consumption and lower fees for labour and capital. Also, the huge military expenses planned by the Government mean the State would need to source extra money somehow, says Anton Safonov of Investcafe.That shortfall will come out of the pockets of Russian taxpayers, as among other possible game plans are “increasing VAT by 2% or even 4%, the introduction of a progressive scale for income tax, a return of the rate for insurance payments to the level of 34%,” Safonov concludes.