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Russian President Vladimir Putin
Photo: SERGEI BOBYLEV/SPUTNIK/KREMLIN POOL / EPA
For a long time it seemed as if Moscow's revenues would continue to flow well despite the sanctions.
Thanks to the high income from the sale of oil and gas, Moscow was able to significantly expand its government spending in the first half of 2022 - and still ran a budget surplus for many months.
However, the picture changed over the summer, with tax revenue falling significantly in July and August in particular.
Now the Russian government is apparently looking for answers to what the Moscow media says is the “biggest budget slump in eleven years”.
According to information from the business newspaper »Vedomosti«, the Russian leadership is also considering massive cuts in government spending.
According to the newspaper, there is talk of a flat-rate reduction of ten percent.
However, this does not apply to numerous budget items that the Russian government considers to be particularly worthy of protection.
This includes payments to Russian pensioners, salaries of state employees, and health care spending.
According to »Vedomosti«, the round of cuts should have no effect on the military at all: the funds for the army and for the procurement of armaments should even increase.
New taxes planned
The Kremlin not only wants to spend less, but also wants to earn more.
According to the business daily Kommersant, the Kremlin is considering introducing a special tax on freight transported by Russian railways.
A surcharge of 9.8 percent on freight rates is under discussion.
This could bring the treasury 190 billion rubles, the equivalent of just over three billion euros.
Deputy Prime Minister Andrei Belousov, who is responsible for economic issues, is expected to support the project, according to Kommersant.
However, industry experts expect this to cause problems for the Russian transport industry, which is already suffering from the sanctions.
Also under discussion: the introduction of an export tax on exports of Russian artificial fertilizer.
The background is the turbulent development of the Russian state budget: Because of the consequences of the war and sanctions, the Kremlin had increased spending for 2022 from 24 trillion to 27 trillion rubles (equivalent to 450 billion euros).
By the end of June, the budget will nevertheless generate a surplus of 1.4 trillion rubles.
In July and August, however, the picture changed: in both months, expenditure exceeded income so significantly that almost nothing remained of the original surplus.
If this trend continues, Russia could end the year with a significant budget deficit.
However: Russia still has considerable sums available in state reserve funds to compensate for a deficit.
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