Moscow is retreating. Who became the main breadwinner of the country

Victoria Pavlova

Muscovites are used to proudly proclaim that the capital feeds a poor province.

This belief in the rescue mission is not based on an empty place, but also on the statements of Mayor Sergei Sobyanin. Speaking at an event of the Russian Society "Knowledge" in the fall of 2021, he pointed out that Moscow is the country's largest donor and provides 60% of transfers to all regions of Russia. It seems that without Moscow, everyone will starve to death. Novye Izvestia decided to check these words, and at the same time figure out who will be the main breadwinner of the country in 2023. To do this, we turned to the statistics of the Federal Tax Service and looked at each region separately, how much money they sent to the federal budget, and how much they kept for themselves in the first half of 2022 and in the first half of 2021.

But first of all, it should be noted that 2022 turned out to be extremely difficult for the federal budget: according to Finance Minister Anton Siluanov, the deficit amounted to 3.35 trillion rubles. More in the entire history of modern Russia, the deficit was only in the covid 2020. And this is despite the fact that revenues at the end of the year increased by 2.8 trillion rubles. Taxes played a key role in the formation of these incomes. According to the Federal Tax Service, in the first half of 2022 (this is the most up-to-date data, there are no statistics for the whole year yet), tax revenues to the federal budget amounted to 9.8 trillion: they exceeded the figures of 2021 by more than a third.

Russia earns, Moscow spends

The budget system of Russia is so arranged that there are no special payments to the federal budget, which are then distributed by regions.

There are only taxes that fall into the common pot, and then they are distributed for different purposes by the Ministry of Finance. The basis of deductions to the federal budget are VAT, mineral extraction tax (mineral extraction tax) and partly corporate income tax.

 In 2021, Sobyanin's statement literally about "feeding" the country with the capital was not far from the truth: according to the results of the first half of the year, Moscow transferred almost 981 billion rubles to the federal budget, which is 13.6% of all tax collections. Ahead was only the oil-bearing Khanty-Mansi Autonomous Okrug, which transferred 1.56 trillion rubles. But even then Moscow lagged behind the main "breadwinner" by more than one and a half times.

In the first half of 2022, the total tax collections in Moscow decreased, but only slightly, due to the destroyed foreign trade relations, the caution of entrepreneurs and consumers in the conditions of their own. The decline was less than 2%. So is Moscow still the breadwinner of the Russian land? As if not so! Deductions to the federal budget decreased by 28% or 274.7 billion rubles, but receipts to the city budget increased by 231.9 billion and amounted to 1.57 trillion rubles. That's how the funds imperceptibly flowed from the general wallet to the wallet of Moscow.

Moscow's share in the federal budget decreased to 7.2%, but in the consolidated budget of the constituent entities of the Russian Federation increased to 22%. But even according to optimistic estimates, about 10% of the total population of the country lives in Moscow, taking into account unregistered visitors, who, moreover, as Ilya Grashchenkov, president of the Center for Regional Policy Development Foundation, notes, are practically not engaged in the actual production of goods.

- Moscow is the financial and operational center of the country. It produces some margin, but it is mostly either just speculative or depends on the financial sector. A large share of Moscow's budget is formed at the expense of small and medium-sized entrepreneurs with rental and construction business with the sale of real estate.

As you can see, Moscow has practically no competitors in terms of its ability to fill its own pockets. St. Petersburg has shown no less growth, but there is a reason for that: Gazprom is now registered in the northern capital. And even taking into account multibillion-dollar taxes, it lags behind Moscow in absolute figures by 3 times. According to Ilya Grashchenkov, it is unlikely that the authorities will seek to change something in this scenario.

- Moscow is a state within a state, and therefore it is difficult to move away from a policy in which the capital is different from the rest of Russia. First of all, an overabundance of funds. If Moscow keeps as much money for itself as other regions, but there will be an increase in discontent, which will be interpreted by the authorities differently than discontent in the regions.And who is the breadwinner here now?

But if someone saved, then someone else paid more.

In terms of contributions to the federal budget, Moscow in the first half of 2022 was overtaken not only by Khanty-Mansiysk JSC, but also by Yamalo-Nenets JSC. KhMAO replenished the state treasury by 2.62 trillion rubles (3.7 times more than Moscow), and YANAO – by 1.23 trillion rubles. These two oil-rich regions provided almost 40% of the federal budget's tax revenues. That's who actually feeds the regions. Not Moscow.

KhMAO and YANAO, living off oil, were doomed to increase tax collections in favor of the federal budget, since in January-June 2021, 1 barrel of Urals brand cost $63.35, and in January-June 2022 – $84.09.

As a result, the KhMAO sends 12 times more funds to the federal budget than it keeps for itself, and Moscow keeps 2 times more for itself than it gives to the federal center. But they are not the only ones who have increased contributions to the federal budget. The TOP 10 sponsors of the federal budget included even such poor regions as the Samara Region, Perm Krai and Orenburg Region. Maybe there was an industrial revolution and factories from these regions, including AvtoVAZ, flooded the market with demanded products? Alas, no. economist and professor of the Department of Economic and Social Geography of Moscow State University Natalia Zubarevich explains that a miracle did not happen.

- Everything is as usual. The increased deductions are explained only by the more expensive oil and gas produced in these regions. Even the state defense order could not have such an impact on finances. It affects mainly personal income tax, which goes to the regional budget.    United Oil…

Russia does not rely on Moscow, but on the regions with oil.

In the Samara region, about 16 million tons of oil are produced per year – quite a bit on the scale of Russia, but even such indicators give a significant increase for the budget. Only the calculation that oil will provide a bright future is wrong. Igor Nikolaev, Chief Researcher at the Institute of Economics of the Russian Academy of Sciences, is sure of this.

- 2022 was the last year when oil prices were high, and the heaviest sanctions against Russian energy products were just beginning to take effect. The main sanctions on oil and petroleum products will start working from February 5, 2023, when the embargo will come into force. The financial base of the center is weakening, but the regions will receive less funds. To compensate for the losses (production volumes will also decrease, Deputy Prime Minister Novak gives an optimistic estimate of a 5-7% reduction in oil production), it was decided to increase the mineral extraction tax in 2023. This measure will smooth out the problem a little, but it will not solve it. It's like a vicious circle - you increase the mineral extraction tax, it increases the tax burden, it depresses business in general, and the same thing for gas - an increase in the tax burden at a time when there is a collapse in gas exports. The proportions of tax deductions to the federal budget will change, and this will be bad for everyone - both the center and the regions. To the center - because there is much less income, to the regions - because they will receive much less funds from the center.Indeed, Bloomberg recorded on January 6 the sale of Urals oil in the port of Primorsk at $37.8 per barrel at market quotations of benchmark Brent oil at $78.57 per barrel.

Russian oil is given away for a song. By placing the burden of maintaining the federal budget on the oil and gas regions, the government has put itself in a difficult, if not hopeless position. There will be less money in the foreseeable future, and the regions have no incentives for the development of non-resource industries. And only Moscow is far-sighted and cares not about the common good (it is pointless without expensive oil), but about its own purely personal. This is the law of the jungle. Moscow can no longer claim to be the All-Russian breadwinner, but it can easily swallow everything that others have earned. Without the intervention of the federal authorities, this will lead to the fact that the extinction of the regions will only increase.