Russia’s recently announced change to a system of progressive taxes and hikes to the basic rates for income and corporate tax will reduce the budget deficit caused by increased military spending, but are unlikely to provide sufficient fiscal tightening to prevent economic overheating, Capital Economics said in a note on May 31. Changes to the tax system were expected following Putin’s state of the nation address in February and his victory in the presidential election in March, but at the heart of the changes is a reform to personal income tax, which will move from a flat to a progressive syst…