Page 109 - RusRPTMar23

capacity facing a demand shock linked to sanctions, falling energy export earnings, and a commodities downturn is still designed in such a way as to maintain this slack. Put bluntly, the regime is happy to intentionally run the economy far below its actual productive capacity because of its political reliance on pensioners who lived on fixed incomes and need to maintain its power to discipline labor and business alike. By implication, this means that attempts to «mobilize» the economy are not intended to do so in the manner most efficient for maximizing production and minimizing the real-terms shock to the economy affecting the military. This is not a Keynesian race to increase aggregate output or a fascist policy employing everyone maximally in support of a shared ideology and mass war. It’s a redirection of resources away from households and sustainable, productive sectors towards purposes that are more easily politically controlled by the regime and its institutional structures. After all, if every able person was employed maximally, then conscription would be much more of a political problem.
Thus Russia’s garrison economy is the transformation of a system from one where natural resource and commodity exporters underwrite a national industrial base and fiscal system to an increasingly Spartan system chiefly driven by state generated internal demands.
6.1.3 Budget dynamics - govt funding plans
Could Russia get more money from business without raising taxes?
The current situation is nothing new. The government always talks about the need for predictable tax rates — however, whenever it needs money, it has a habit of trying to impose sudden surcharges on businesses (allowing them to claim taxes remain the same):
● Gazprom paid 1.24 trillion rubles into the budget as an additional Mineral Extraction Tax payment in 2022. This sum was sufficient to compensate the state for the sharp fall in oil-and-gas revenues in the second half of the year. For example, in November Gazprom’s MET payment of 466 billion rubles represented almost half of the total oil- and-gas income – without it, revenues would have been down 48%. In January 2023, Gazprom’s MET payments reverted to their usual 44 billion rubles.
● Belousov in 2021 said that metal companies had “ransacked” the state for 100 billion rubles during the pandemic, and insisted that this money should be returned either through taxation or a one-off payment.
● In 2018, when he was working in the presidential administration, Belousov calculated windfall profits of metal companies, fertilizer and chemical gas companies at more than 500 billion rubles. He proposed collecting this money and spending it on the president’s initiatives. Nothing came of the proposal.
109 RUSSIA Country Report March 2023 www.intellinews.com