Russia Plans Raising VAT to Reduce Deficit, Control Inflation

(MENAFN) Russia plans to increase its value added tax (VAT) by 2 percentage points to address the budget deficit and help contain inflation, according to Finance Minister Anton Siluanov.

This announcement was made during an interview with a news agency released on Monday.

Earlier that day, the Finance Ministry presented a draft budget for the years 2026 to 2028 to the Russian parliament.

Siluanov emphasized that “a balanced budget will be an important factor in economic growth, as it is the basis for slowing inflation, macroeconomic stability, and the possibility of easing monetary policy.”

The decision to raise the VAT rate from 20% to 22% was selected as an additional measure because it has “less negative impact on the economy compared to alternative measures,” the minister explained.

Essential items like food and medicines will continue to be taxed at a reduced flat rate of 10% to shield low-income families from the impact.

Siluanov noted that this tax increase was preferred over increased government borrowing, which would have caused higher inflation and forced an interest rate hike.

“The decision to balance the budget through tax increases gives the central bank room to ease monetary policy,” he added.

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