Economics ministry proposes luxury tax apply to 1,000-sqm residences, 200-250hp cars
MOSCOW. Feb 24 (Interfax) - Owners of real estate with a floor area upwards of 1,000 square meters and vehicles with 200-250 horsepower might have to begin paying a luxury tax in 2013, Deputy Economic Development Minister Stanislav Voskresensky said.
"I'll explain where this figure came from - 1,000 square meters. For us the most important thing is that the middle tax does not fall under this tax," Voskresensky said in an interview with Izvestia.
"Clearly, whoever has real estate with such an area certainly does not fall within the definition of middle class. Naturally, there will not be many owners of such real estate and consequently payers, most of the luxury tax would come from the transport tax. But still the amounts will be small. But the important thing is not to wait until a tax on real estate is introduced, the higher tax on individual property could be introduced now already," Voskresensky said.
Izvestia reported that for the vehicle tax the threshold that divides a luxury automobile from a regular one has not been found yet. Voskresensky said several options are being considered. A vehicle with 200 hp or 250 hp could be considered a luxury. The price of the automobile will not be used as a criterion so that vehicles are not sold with understated price tags and a large part of the payment made "in an envelope."
The paper cited a Finance Ministry source as saying that the ministry is also working on the parameters of the new tax, but is not in a hurry to put its proposals into writing. "The transport tax generates only about one percent of all revenue in the year. Half of the amount is paid by owners of automobiles with up to 150 hp. And even if we double the tax for others, revenues for the budget will only increase by a half percent. Is this worth the fuss?" he said.
Prime Minister Vladimir Putin mentioned the possibility of a luxury tax at a United Russia congress at the end of last November, and repeated his view on the matter at the recent forum of the Russian Union of Industrialists and Entrepreneurs (RSPP). He said the comparatively low revenues from such a tax should not be a deterrent, as a on wealth should have a "moral-ethical nature" rather than a fiscal one.