Moscow (AsiaNews) – Businesses in Russia are complaining about the excessive tax burden, whilst the State Duma is proposing to share the “burden of war” amongst citizens. Delovaya Rossiya (“Business Russia”), one of the country’s most influential business organisations, is expressing its resignation regarding the tax issue: “A one-off tax increase today is better than endlessly high rates forever,” said the organisation’s head, Aleksey Repik, during a meeting with Vladimir Putin.
Members of the organisation have put forward 52 proposals for economic reform, including the abolition of the simplified tax system with a 6 per cent rate. This would primarily affect entrepreneurs who earn a living through their own labour. Repik denied that he had called for tax rises, describing the document as “old, canned material”, but The Insider has established that the document dates back only to September this year.
The chairman of Norilsk Nickel, Vladimir Potanin, on the other hand, has openly criticised the tax increases: in his view, the tax burden on businesses is not boosting the state’s coffers but is damaging state revenues, and he stated that “the tax base is shrinking, whilst expenditure is rising”. Meanwhile, Communist Party MP Anatoly Lokot believes that “all Russians must bear the burden of the war”, putting forward this argument during a session of the State Duma in which the budget was being discussed.
The Delovaya Rossiya congress was held in Moscow in recent days, with Vladimir Putin taking part via videoconference, after meeting in person with Aleksey Repik, who told the president that Russian entrepreneurs “are not temporary workers, but patriots”, and proposed scrapping tax breaks for small and medium-sized enterprises. Putin said he was “very pleased that entrepreneurs themselves are raising the issue of tax increases”.
The economist Vladislav Zhukovsky commented, saying, “I understand perfectly where this initiative comes from: all the proposals put forward by Repik of Delovaya Rossiya, and by Aleksandr Shokhin of the Russian Union of Industrialists and Entrepreneurs, boil down to attempts to save themselves – that is, the large companies”. Repik does not represent a small or medium-sized enterprise; he is a hugely successful entrepreneur, owner of well-known brands such as Eapteka, R-Stroy and Research Lab, amongst others. His company has close ties to the state and has received substantial funding since the start of the war with Ukraine.
Zhukovsky adds that “the authorities are well aware that there are no funds in the budget, that the war will continue, that the budget for the next three years is entirely earmarked for defence, and that there is no end in sight to this bloodbath”. The budget deficit accumulated from 2022 to 2026 far exceeds 20,000 billion roubles.
Consequently, Putin is on the hunt for funds, and every businessman who turns up at the Kremlin tries to curry favour with him, to demonstrate that “we are not temporary workers, we are here to stay, we will not take money out of the country”, even though, of course, they do. “Everything for the front, everything for victory”, as Finance Minister Anton Siluanov stated when presenting the budget for the next three years. Furthermore, according to Zhukovsky, such support for the government is a way of protecting their businesses from nationalisation.
In an interview with Rbk, Potanin stated that the tax burden on Russian businesses is “excessive and unstable” and highlighted a lack of investment, but according to the entrepreneur, the Russian economy has not yet hit rock bottom. Speaking at the Delovaya Rossiya forum, Putin described one of the main tasks for businesses as “launching a new cycle of investment in Russia”.
However, even according to forecasts by the Ministry of Economic Development, investment will not grow until 2028, and these estimates include state defence contracts. Any tank, any gun, any drone, any military weapon containing any electronic component is considered a durable good and an investment in the economy, but this has nothing to do with civilian production, the supply of goods or the availability of products on shop shelves: “It is simply a waste of money, resources, materials and taxpayers’ money collected from them,” says Zhukovsky.
