Putin raises taxes for wealthy Russians before voting on his rule

MOSCOW (Reuters) – President Vladimir Putin raised the income tax for wealthy Russians and offered new state benefits to families with children on Tuesday, days before the country votes on reforms that could keep him in power until 2036 .

In a televised address to the nation, Putin, 67, said Russia’s response to the coronavirus crisis had saved tens of thousands of lives and ordered the extension of various support measures to cushion the economic consequences.

Departing from a 13% flat tax he himself introduced nearly two decades ago, Putin said the wealthy would now pay 15% in annual income of more than 5 million rubles ($ 72,833) and that the additional cash would go to help sick children.

The measure, which will be introduced in January, is likely to work well with voters frustrated by years of falling earnings. Many also dislike the class of wealthy entrepreneurs who emerged after the collapse of the Soviet Union.

Putin’s speech came ahead of a seven-day national vote starting Thursday in which the Russians will approve or reject a series of reforms, including one that could allow Putin to serve two more terms in the Kremlin instead of resigning in 2024.

Putin promised to expand a program to help families with mortgages and offer a one-time payment next month of 10,000 rubles for each child up to the age of 16, measures he said would help them overcome the consequences of the coronavirus crisis.

Russia, which has registered the third highest number of coronavirus cases in the world, has largely ended its blockade, but the crisis is expected to cause an economic contraction of 6% this year.

Putin also proposed reducing IT companies’ income taxes to 3% from 20%. Although details are lacking, the proposal led shares of Russian internet giant Yandex to increase more than 3%.