Holiday week, financial support for affected & taxes for rich: Putin lays out coronavirus emergency plan

Russians will get a week of paid leave and a boost to benefits for those most in need, while the wealthiest will have to pay more revenue taxes, the Russian president said as he presented his plan to deal with the coronavirus.

Speaking in a televised address on Wednesday, President Vladimir Putin announced a number of measures designed to support the Russian people and the national economy amid the increasingly serious threat of coronavirus in the country. He said there was no feasible way to keep the virus out, but that an efficient, coordinated effort to preempt and mitigate the damage will help protect people from the worst outcomes.

Week-long holiday

One of the immediate decisions taken by the government was to declare next week a long national holiday in Russia. Salaries for the days off will still be paid, Putin said. This is expected to help slow the spread of the coronavirus.

The president warned against underestimating the threat posed by the virus and said everyone should act responsibly.

Please, don’t think like people often do: ‘This cannot touch me.’ It may touch anyone.

Constitution vote postponed

Russia will also postpone the national vote on constitutional amendments, which is currently scheduled for April 22. The amendments package was tabled by Russia’s president back in January and greenlit by legislators earlier this month.

The proposed changes include the transfer of some presidential powers to Russia’s legislature, as well as the creation of a new governing body – the State Council. The package also ‘resets’ the term count for the sitting president and, if adopted, will effectively allow Putin to run for office again.

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Benefits & frozen credits

A big chunk of the measures announced by Putin deal with various benefits. The usual checks for eligibility will be suspended for six months, while some of the payments – like paid sick leave and unemployment payments – will be given a boost.

Russians whose monthly incomes suffer a sharp drop for whatever reason will be able to ask for a suspension of payments on any credits they owe. Similar support will be given to small businesses, which will also get tax breaks and protection from bankruptcy to help keep them afloat during the economic slowdown.

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Putin proposes mortgage & loan holidays, new payments for families with children to tackle aftershocks of Covid-19

Taxing the rich

Wealthier individuals and big companies are expected to cover some of the cost of the emergency measures, according to Putin’s plan. Russians who have money in bank accounts and have invested in equities over a certain threshold will have to pay income taxes on their revenues – this previously came under an exemption.

The tax on corporate dividends paid to foreign jurisdictions will get a hike from two percent to 13 percent. Putin said most of this money goes directly to individual business owners, who avoid paying due taxes in Russia this way.

“It will require changing our agreements with certain nations on avoiding double taxation,” Putin said. “If our foreign partners do not accept our suggestion, Russia will withdraw from such agreements unilaterally.”

Brace for impact

Russia has so far largely been spared by the Covid-19 pandemic. It currently has 658 cases of the coronavirus, and the country was quick to implement certain crucial measures – like restricting international travel – to keep the disease in check.

However, the number of infected people has jumped by 163 in 24 hours, fueling concerns that an explosive growth of positive tests may happen within days.

Analysts note that the national economy is also beginning to experience the effects of the global economic slowdown. As Russian officials stated earlier, the country came to the crisis better prepared than many thanks to its large reserves and macroeconomic stability – but concerns remain that it still must brace itself to navigate through the storm.

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