The principles of personal income tax (PIT) calculation in Russia were established in 2001 and had not been changed since then. This gradually led to overtaxation of employees’ income. Consequently, Russian citizens retain less money for the purchase of goods and services, and that became even more obvious during the economic crisis. In this article, the author suggests to consider the experience of the developed countries and deduct subsistence level from PIT base, introduce the mechanism of automatic indexation for inflation rate into the Tax Code of Russian Federation, and return to progressive taxation of personal income.
Intertax