Moscow, Russia – The Russian business community is calling for a more predictable fiscal policy from the government as they accept that another round of tax hikes is inevitable to address the growing budget deficit. The burden of the conflict in Ukraine on state finances has led to a doubling of the defense target for 2023, which is now over $100 billion, or one-third of all public spending. The government has already introduced new taxes and export duties to finance the budget deficit, but businesses want more clarity on how these changes will impact their investments.

Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, said at a financial conference that while businesses understand that the tax system cannot remain unchanged, they need formulas to predict how it will evolve under different conditions. Last week, Russian businessmen proposed a deal with President Vladimir Putin to increase income tax with long-term predictability of fiscal policy. A source familiar with the discussions told Reuters that this was an attempt to strike a gentleman’s agreement where businesses would pay more but there would be no unexpected changes in the near future.

The Russian government has been struggling to balance its budget due to rising military spending and declining oil prices. In addition, sanctions imposed by Western countries have had a negative impact on the economy. As a result, there is growing concern among businesses about the sustainability of Russia’s economic growth and stability. Despite these challenges, some experts believe that Russia’s strong reserves and stable currency provide some cushion against economic shocks. However, any further deterioration in economic conditions could lead to even greater pressure on businesses and investors alike.

By Editor

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