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Rich Russians to face bigger payments for luxury properties

October 18, 2014, 20:44 UTC+3 Zamyatina Tamara
© ITAR-TASS/Valeriy Matytsin

MOSCOW, October 18. /TASS/. Gap between the wealthy and lower-income Russians is getting wider and the authorities are trying to curb the tendency.

A freshly issued Global Wealth Report, which is published annually by Credit Suisse, a leading Swiss bank suggests that a mere 10% of Russia’s population own 85% of the country’s material and financial assets. The same indicator is 75% for the U.S. and 64% for China.

Along with it, Russia has 158,000 individuals whose private financial assets denominated in U.S. dollars exceeds $1 million. This figure makes up 1.5% of the world’s total number of dollar-denominated millionaires.

The list of wealthiest Russians includes not only representatives of big business like Roman Abramovich, Vladimir Potanin or Alisher Usmanov. Standing side by side with this group are executives of state corporations.

State Duma deputy Valery Rashkin, a member of the Communist caucus in parliament, produced a bomb-like effect in the Russian-language segment of the Internet recently by saying that the latter executives were making from $ 32,500 to $ 110,000 a day.

“They’re getting it a day! Just think of the figures!” he wrote with indignation.

To make the millionaires’ earnings transparent, a bill prohibiting ownership of real estate abroad by Russian civil servants has been submitted to the State Duma. The legislators also recommend a ban on accounts and deposits at foreign banks and on any depositions kept outside of Russia.

Also, restrictions on the growth of state employees’ legal revenues are proposed. On the background of an economic slump, the government has introduced a bill, under which the salaries of high-rank Russian officials will not be growing as of January 1, 2015, and their indexations will stop.

As of January 1, 2014, a new tax on the citizens’ real estate comes in effect in Moscow and somewhat later on in other regions of the country. It has already been dubbed a tax on luxury, as the progressive scale of taxation embedded in it will spare the owners of standard city flats but will make those who possess palaces and de luxe apartments unstring their purses.

The plight of some of them will be really unenviable. One of them is Yevgeniya Vassilyeva who was features in a high-profile resounding case of the state company Oboronservis. The owner of an apartment with the floor space of 192 sq m in downtown Moscow, she will have to pay 740,000 rubles /$ 18,000/ a year.

It is also true, though, that the authorities’ aspirations do not always invite understanding among rank-and-file Russians. In the very least, a testimony to this could be seen during a recent approval of the decision to pay out compensations from the budget to the Russians whose assets at foreign banks had been damaged by U.S. and EU sanctions.

The interpretation of this law that has taken shape in the consciousness of a man on the street is that he will have to pay the oligarchs for the loss of mansions on the shores of warm faraway seas. Even the top-rated internationally acclaimed film director Nikita Mikhalkov, quite a wealthy man, told a federal news channel the law looked bewildering.

The other side of the story is that the Russians are mostly preoccupied with the concerns over their personal budgets at this time of turbulent circumstances and seem to care little to counting the money in the wallets of the ladies and gentlemen upstairs. The All-Russia Public Opinion Research Center says only 13% respondents said in a recent poll they had familiarized themselves with the income declarations of senior officials.

When asked about the reasons for this lack of curiosity, 34% respondents said they did not take any interest in other people’s money and another 29% made known their inherent mistrust to information of this sort.

In most probability, the crux of the matter is the inability of the people living on modest ruble-denominated wages to perceive the revenues measured in millions or billions of dollars. Russia’s Federal Statistics Service says, for instance, that an average salary in this country was 33,280 rubles /$ 832/ in May 2014.

Global Wealth Report 2014 suggests that the Russians’ revenues grew by a factor of eight in the period of 2000 through 2007 but their growth slowed down remarkably in subsequent years and stood at only 15% between 2007 and 2014.

ITAR-TASS may not share the opinions of its contributors