Putin raises taxes and tariffs: every Russian will pay for the war in Ukraine
Putin's maniacal obsession with the war in Ukraine has awakened a fiscal maniac in him. These are the conclusions that can be drawn after reading the Russian government's tax desires.
1. At the center of the tax increase in Russia is the government's desire to increase VAT from 20% to 22%. Hundreds of commentators have written that this will lead to inflation. However, the VAT increase is a short-term factor for price increases that the Russian population will easily swallow, just like the freezing of foreign currency deposits in banks and the increase in utility tariffs.
But what can really lead to discontent is the actual elimination of the simplified taxation system. Few people have noticed, but the Russian government is proposing to lower the threshold for simplified taxation from 60 million rubles to 10 million. This kills optimization through the fragmentation of businesses and gray traffic from non-cash rubles to cash. In practice, this is guaranteed to lead to a strong rise in prices in the service sector, but it is unlikely to kill conversion centers. As Russian practice shows, tariffs will simply increase .
2. The Russian Ministry of Finance is not planning to stop with VAT torture of small businesses, but goes further – it cancels privileges for entrepreneurs on insurance premiums in trade, construction and mining.
In other words, not only will the simplified taxation system be eliminated, but they will also be forced to pay an increased level of social contributions.
3. The draft budget for 2026 also contains a number of special surprises for the "chosen ones": an increase in excise taxes, an increase in the recycling fee, the transfer of the gambling business to the turnover tax, etc .
Against the backdrop of growing fiscal pressure, monopolies stirred. Russian Railways was so eager to raise tariffs that they planned to do so in early December this year. Utility bills in some regions have already increased by 80% in 2025 (against the announced 10%), but the increase in electricity prices in 2026 is scheduled for October next year.
Therefore, it remains to state the diagnosis: the Russian economy will experience a strong increase in fiscal pressure starting in 2026, which will lead to an extension of the period of acute monetary insufficiency. Or to put it simply: higher taxes and monopoly tariffs lead to inflation, and rising inflation pushes the CBR to maintain high interest rates, which makes the Chemizov guard (Rostec) whine and is already irritating weak state bankers like Kostin (VTB) or Fradkov (Sberbank) .
The Russian market managed to react to the upcoming fiscal pressure by increasing the average interest rate on deposits in the top 10 Russian banks to 15%. If the fiscal plans of the Russian Ministry of Finance are adopted as approved by the federal government (I have no doubt that the monopolies will raise tariffs), the room for further cuts in the CBR rate will be narrowed to a minimum. And this opens the way for accelerating the stagnation of the Russian economy.
However, the central point of this whole story is the fact that now every Russian will pay for the war in Ukraine from their wallet.
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