Big budget hole due to sanctions
Kremlin plans special tax for large companies
02/08/2023, 2:15 p.m
The Russian government always emphasizes the ineffectiveness of Western sanctions, the facts seem to be a little different. The Kremlin is apparently planning a one-off voluntary special tax for large companies. Already in January, 23 billion euros are missing from the state treasury.
In view of Western sanctions and a deep budget hole, the Russian government says it is in talks with large companies about a one-time special tax. “Yes, a voluntary, one-off fee from the business is under discussion,” said Deputy Prime Minister Andrei Beloussow, according to the Interfax news agency. Above all, large companies that had made high profits last year should make a contribution, said the 63-year-old.
“It’s not a tax increase. It’s a kind of windfall tax, as it is called in tax practice, a one-time tax collection,” said Beloussow, who is considered an important economic expert by Kremlin chief Vladimir Putin.
Despite high oil and gas revenues, Russia ran a budget deficit of 3.3 trillion rubles (43 billion euros) last year. Significantly greater losses are threatened this year.
In December, the western industrialized countries set a price cap for Russian crude oil, and in February also an upper limit for oil products. This is the reaction to Russia’s war of aggression against Ukraine. Russia’s budget is already noticeably in trouble: in January 2023 alone, the deficit amounted to 1.76 trillion rubles (23 billion euros). This already corresponds to 60 percent of the shortfall estimated for the year as a whole.