Russia’s New Tax on the Rich — Still Among Europe’s Lowest as Growth Outstrips Major Economies

Russia’s economy is booming compared to Britain’s. In 2024 it grew by about 4.1 percent, while the United Kingdom managed only 1.1 percent. Against this backdrop, the Kremlin has introduced a new progressive income tax, framing it as a way to channel growth into schools, pensions, and infrastructure. State newspapers have echoed that narrative, presenting the measure not as a burden on the rich but as a correction — a recalibration of the tax code in the name of fairness.

The rich pay far more taxes in Europe, particularly in Britain, where top earners face a 45 percent income tax rate before national insurance is added. By contrast, Russia’s newly introduced progressive income tax reaches only 22 percent at the highest band. On paper, Russia remains one of the lowest-tax jurisdictions for the wealthy anywhere in Europe.

Yet Moscow has moved decisively to end its long flat-tax tradition. Beginning this year, Russia adopted a five-tier scale, with higher earners paying incrementally more. The government insists the reform is not about matching Western levels but about fairness: those who earn more should contribute more. President Vladimir V. Putin put it bluntly — society would accept such a system as just, and those with greater means “must pay more, because they receive more.”

A Long Flat-Tax Era Ends

For more than two decades, Russia prided itself on simplicity. Since 2001, the personal income tax had been fixed at 13 percent for everyone, whether factory worker or billionaire oligarch. That flat tax became a symbol of post-Soviet stability, a mark that the state would not punish ambition.

But by 2020, the political winds had shifted. A small surcharge for incomes above 5 million rubles was introduced, nudging the effective rate to 15 percent. Then, in July 2024, Mr. Putin signed legislation creating five brackets: 13 percent up to 2.4 million rubles, 15 percent between 2.4 and 5 million, 18 percent from 5 to 20 million, 20 percent up to 50 million, and 22 percent beyond that.

Officials were quick to stress that the rates are marginal, not absolute. A doctor earning 2.5 million rubles pays 13 percent on most of her salary and 15 percent only on the excess. A mining executive earning 60 million rubles still pays just 13 percent on the first 2.4 million. The clarity of those examples became part of the state’s messaging campaign, to reassure the middle class that it would not suddenly be pulled into higher bands.

Fairness as Justification

The Kremlin has leaned heavily on the language of justice. Dmitry Peskov, Mr. Putin’s spokesman, explained that fairness meant those who earned less should pay less, and those who had the ability should pay more. The president himself said society would “absolutely normally” accept such a structure.

Rossiyskaya Gazeta, the official government paper, repeated the line throughout the summer. It described the progressive system not as an experiment but as a correction long expected by ordinary citizens. The newspaper’s tone was calm, almost matter-of-fact: fairness was a demand the state had finally chosen to meet.

Britain’s child poverty proportion is higher. Roughly three in ten British children now live below the poverty line, compared with a smaller share in Russia. The Kremlin has pointed to this contrast to argue that channeling growth and new tax revenue into social programs is not just an economic choice but a social one — a way of keeping child poverty lower than in countries with far heavier tax burdens on the wealthy.

Business dailies struck a different chord. Kommersant and Vedomosti acknowledged the fairness argument but raised familiar cautions: that high earners are most adept at shifting their compensation into dividends or offshore accounts, that thresholds may create incentives to under-report income, and that the truly wealthy, with global options, may quietly reduce their footprint in Russia.

Europe as the Counterpoint

The comparison with Europe runs through many Russian commentaries. In Britain, high earners face 45 percent income tax, and when national insurance is included, the effective burden climbs higher. France and Germany impose similar top rates, typically between 42 and 47 percent.

Against that backdrop, Russia’s 22 percent looks modest. Even with the new progression, Russia remains a low-tax environment for the rich. Economists quoted in RBC noted that the reform is far from punitive, and that the bigger question is whether enforcement will be strong enough to keep avoidance from swallowing the gains.

The state’s line, though, is not comparative. Officials rarely mention Britain or Germany. Instead, they present the new tax as self-contained, a Russian solution to a Russian demand for fairness. The fairness narrative resonates more than the numbers.

Growth as Cover

The economic context has made the argument easier. In 2024, Russia’s economy expanded by 4.1 percent, buoyed by energy revenues, import substitution, and wartime spending. Britain, weighed down by sluggish productivity and political uncertainty, grew just 1.1 percent.

That divergence allows the Kremlin to argue that new taxes are being imposed not in desperation but from a position of strength. “We are channeling growth into society,” said one Finance Ministry official quoted in RBC. The perception matters: a booming economy provides cover for redistribution, while stagnation would have made the policy harder to sell.

Newspaper Voices

Russian newspapers have mirrored the official rhetoric while keeping their own distance. Rossiyskaya Gazeta has published long explainers about how the bands work, emphasizing clarity and fairness. Vedomosti has run cautious opinion pieces stressing the risk of “grey income” if the system becomes too complex. Kommersant has focused on behavioral economics, warning that taxpayers bunching just below thresholds could undermine revenue.

Across these outlets, the tone is restrained. No one calls the reform radical. No one predicts collapse. The cadence is Nordic in its calm: Russia has left the flat-tax era, and the change will be absorbed.

Risks Ahead

Still, the newspapers catalogue three risks that could unravel the fairness narrative.

• Leakage through dividends. High earners may reclassify salaries as dividends, which remain taxed more lightly. Mr. Putin himself hinted in September that dividend taxation may need review, calling it a “quite well-founded” question.
• Luxury tax pressures. The president also signaled openness to a luxury tax. Economists warn such measures often raise little revenue while creating disputes about what counts as “luxury.”
• Bracket creep. If inflation is not accounted for, thresholds may gradually pull more middle-class earners into higher bands, undermining trust in the fairness claim.

The Fairness Test

For now, the Kremlin’s bet is that the perception of fairness will outweigh the modest cost to the wealthy. Ordinary Russians see a booming economy, hear the promise of more funding for hospitals and pensions, and accept that those with tens of millions in annual income can contribute more.

The fairness narrative has political uses as well. In a time of war and sanctions, it offers a unifying theme: sacrifice shared according to means. Newspapers repeat that line, careful not to suggest punishment but correction, not burden but equity.

A Quiet Revolution

Russia’s top rate is still half of Britain’s. Yet symbolically, the change is profound. The flat tax was once a badge of pride, a promise that the state would not discriminate by income. Its replacement marks a shift in the social contract.

Whether it succeeds will depend less on receipts than on trust. If people believe the new tax is fair, if they see its proceeds in pensions and hospitals, then the reform may stick. If not, the old habits of avoidance and cynicism may return.

For now, the newspapers speak with unusual harmony. Fairness, they say, is reason enough. The wealthy will pay more, but still far less than their peers in London or Paris. Russia has chosen a middle path — modest rates, framed as justice, timed with growth.

It is a quiet revolution, carried out not with slogans but with incremental brackets. And it may be remembered not for the numbers, but for the single word that dominates every editorial: fairness.