US EditionA Slowing Wartime Economy Pushes the Kremlin to Tap Consumers for Revenue
The VAT hike from 20% to 22% and lower registration threshold aim to add about 1 trillion rubles to the budget amid slowing growth and falling oil revenues.
- On Jan. 1 the Kremlin will implement a VAT increase to 22% under legislation moving through Russian parliament, affecting consumers and small businesses.
- After two years of wartime growth, Finance Minister Anton Siluanov said Russia's slowing economy and the need for revenue led to raising VAT to 22% from 20%, as the country cannot borrow on international bond markets.
- Also included are higher excise and fee changes such as raising excise duties on alcohol, tobacco and vapes, hiking licence and registration fees, and considering a tech tax up to 5,000 rubles.
- Consumer prices could rise initially but later ease demand and aid inflation control, while from Dec. 1 car buyers face higher fees as the 3,400-ruble rate ends for imports over 160 horsepower.
- Facing lower oil revenues and high Central Bank of Russia interest rates, Alexandra Prokopenko, fellow at the Carnegie Russia Eurasia Center, said the Kremlin has about a dozen months before tough trade-offs arise.
18 Articles
18 Articles
Russia’s wartime economy loses steam as oil revenues fall and the budget deficit grows
After two years of robust growth fueled by military spending on the war in Ukraine, Russia’s economy is slowing. Oil revenues are down, the budget deficit is up and defense spending has leveled off. The Kremlin needs money to keep its finances steady — and it’s clear where President Vladimir Putin intends to get it: at the cash register, from ordinary people and small businesses. Story by Charlotte Lam.
Associated Press News
A slowing wartime economy pushes the Kremlin to tap consumers for revenue
Russia's economy has slowed after two years of robust growth fueled by the war in Ukraine. That's opening a hole in the Kremlin's budget, and President Vladimir Putin is looking for money to cover the deficit.
Putin's financial problem is intensifying, and the Kremlin must now take action to plug the budgetary holes, for which Putin made sales necessary.
After powerful advances in recent years, Russia's economy is now in decline. Petroleum came down, and the budget deficit is growing. Moscow needs money to keep its financial stability. To get it, the power of Kremlin decided to tax the population and small businesses, reports tvrinfo.ro.
Even a reduction in military spending does not save from a significant drop in state budget revenues, which in October amounted to 12 percent
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