The Russian broadsheets report that the government continues to look for additional sources of budget revenue and is now discussing the idea of outright tax hikes in the next budget (and electoral) cycle, starting 2018. Details of the discussion are scarce, but according to Vedomosti, citing several unnamed sources within the government, the government is mulling the idea of raising VAT and personal income tax by 2pp each.
As oil and gas output/exports are expected to plateau and the share of
However, as the government runs out of easy solutions, harder choices will have to be made to bring the fiscal pattern onto a sustainable
On our estimates, a 2pp rise in both VAT and personal income tax might each bring 0.6% GDP worth of additional budget revenues (i.e. 1.2% of GDP altogether) which would help to smooth the shortfall in oil & gas revenues. That said, we note that for political considerations tax hikes are unlikely to be introduced before presidential elections in 2018, while the bulk of the