Little by little: how the government is trying to patch a hole in the budget

Yelena Petrova, Natalia Seibil

The Russian government has been unable to plug the hole in the budget for six months. According to the data for May inclusive, 3,411 trillion rubles are missing. In 5 months, the country exceeded spending by as much as it was going to accumulate in a year. At first, the ministers explained the shortage with technical problems: they say, they changed the order of calculations, everything will be fine by April. By April, things had not improved, and now it became obvious: the problem is systemic, there is simply not enough money coming into the budget, and classified expenses do not become less. Yes, and the sanctions are pressing, no matter how anyone flaunts.

Tax on interest on deposits

The law on a 13% tax on interest on deposits was adopted back in 2019, during the pandemic, but fell under a moratorium. This year, the moratorium expires, and the LDPR proposed to extend it. But it was not there — the deputies stumbled upon a reinforced concrete refusal. The cabinet calculated that thanks to this tax, 101 billion rubles could be collected into the treasury. Financial Jan Art says:

— The reason is clear — a huge hole in the budget. And moreover, the government cannot cancel some trickles in the budget. I believe that for all types of tax revenues, any, the government is looking for where else to tighten these nuts. Therefore, this time the moratorium will not be extended.

The new tax will affect those who have more than 1 million rubles in their account. Such deposits make up a fifth of all deposits. There are no recent statistics, the information for January 2022 suggests that there were 6.5 million such deposits in the country. It is clear that after the flight from the country, at least 700 thousand, and at most 1 million people, their number decreased. And you will have to pay 13% on income on deposits minus 75 thousand rubles a year.

— The tax will not be on all money, but on interest income above the key rate. To be fair, it should be noted that there is an economic logic here. This is not double taxation, it is still a value-added tax. It cannot be said that taxes have already been paid from these incomes. No. No one takes tax from the deposit amount itself», — says Yan Art.

Nevertheless, the danger that people will go into the cache is very real, «the appetite for deposits will cool down, which, in general, is not at the peaks, it is not at the bottoms, but also not at the peaks now. And in general, coupled with other news backgrounds, it is more likely to once again arouse interest in cash».

Voluntary collection or emergency tax

Another initiative of the cabinet — to raise money from the business — was met with restraint, but with understanding. But Deputy Finance Minister Sazanov speaks in the Duma and says that the voluntary collection was yesterday. And now we need to introduce a tax on excess profits. Businesses, especially large ones, are not quiet sheep depositors. They have the strongest lobby at the very top. Moreover, many of them consider themselves victims of sanctions. They have nowhere to leave the ship, so the war against the new tax will be serious. Russia remains the only country where they can park their profits, and here the Ministry of Finance is sitting in ambush and waiting for how to deprive them of their blood. Therefore, today a shout was heard from the Kremlin in the direction of the government, and the press secretary of the president Peskov reassured businessmen — in The Kremlin knows nothing about this, no one has coordinated it with the supreme power. Economist Igor Nikolaev considers such actions of the authorities chaotic:

— If we constitute the concept of «emergency tax», other taxes may appear. It turns out that at any time you can introduce some kind of tax.

All the «streams» cannot solve the cardinal budget problem. There are three ways left: the devaluation of the ruble, domestic borrowing and privatization. Otherwise, the belligerent country will default.

 — The country is conducting military operations that cannot be assessed and included in the draft budget. Our income is a relative constant, and expenses in these conditions are a variable. Therefore, this hole may decrease, it may increase, but it is like a pulsating black hole in space, depending on the situation. But while we are in the active phase of hostilities, there can be no other situation», — Jan Art is sure.

Borrowing and privatization

The 300 billion that they want to take from business does not cover the deficit, says economist Igor Nikolaev. Such measures will not cover the deficit of more than 3 trillion. Drastic measures are needed — borrowing and privatization.

Foreign borrowing markets for Russia are now cut off, so it remains to rely only on domestic reserves. But there are not so many people willing to lend money to the country inside the country, despite the good interest rates on bonds.

— Siluanov expressed extreme concern at the forum in St. Petersburg that state banks did not participate in the last placement of government bonds, where a sufficiently large percentage was offered. Gref promised that they would participate.- says Igor Nikolaev

Such a restrained position even of state financial institutions contributes to the fact that the hole in the budget is growing every day.

The second component of the pill that will have to be swallowed may be privatization. However, experts do not believe that it will be large-scale:

— To patch up the hole, we may try to start a new privatization. I don't think it will be too successful, but they may make offers that will be difficult to refuse. They will promise preferences to those who have money.

Igor Nikolaev himself speaks very cautiously and with a high degree of skepticism about a topic that is quite painful for the country. Yes, there is a lot of money inside the country now, and there are few tools for multiplying them, but the risks, especially long-term, are not small. Therefore, those who are sitting on bags of money will think one more time whether it is worth spending them.

Ruble devaluation and inflation

Devaluation is a medicine prescribed to Russia by Deputy Prime Minister Belousov. In his opinion, the corridor of the ruble to the dollar should run between 80 and 90 rubles per unit of American currency. But the Central Bank stands in the way of the government, explains financial analyst Art:

— The Central Bank is against it, and the government is for it. The Central Bank has a strong trump card — they cannot lower the ruble too much, as this will cause inflation, and inflation is the main indicator of the state of the economy for the supreme power. And the government says no, lower it, otherwise we will not sew the edges of the budget, there will be no inflation, but there will be no salaries for state employees.

Therefore, Deputy Prime Minister Belousov offers a corridor. He used to talk about 75-85 rubles per dollar, now the dollar is already worth 86. Experts believe that they will give 90 rubles per dollar per year.

This idea has many opponents. Devaluation is a double—edged sword. Ruble incomes are growing, but inflation is eating them up.

As the fighter for the rights of black Americans Martin Luther King said, «I have a dream» — I have a dream. The economist Nikolaev has such a dream:

— The fundamental way is if the economy can be transferred to a stable path of its growth. Incomes should grow, the tax base should grow.

The Russian government does not have such an action plan now and will not have one in the near future.