Regions’ Dissatisfaction with Unfair Tax Distribution Is Growing in the rf

The kremlin is actively promoting the idea of moving about 170 central offices of state-owned companies from moscow to regions that generate most of their revenue from resource extraction. This move, presented as “demoscovization”, is an attempt to respond to regions’ growing discontent over unfair tax distribution.

Populist rhetoric is not backed up by real action. After Gazprom moved to St. Petersburg, the city’s budget grew by 25 %, but hundreds of employees were laid off. Moving the office to Khanty-Mansiysk, the main oil and gas producing region of the rf, could result in thousands of layoffs. Companies such as RusHydro and Norilsk Nickel formally announce their relocation but in reality retain their moscow details.

Economic decentralization carries political risks for the kremlin. Regions with rich mineral resources may begin to ask uncomfortable questions—from financing the war against Ukraine to the state of local infrastructure. This threatens to destabilize the vertical power structure that putin has been building for years.

Although the deadline for submitting proposals expired on October 1, 2024, officials are already hinting that the plan will not be fulfilled  before 2030–2035. In fact, nothing will change for the regions.

The contrast in finances: the average salary in moscow is $1,980, while the national average is $1,100. The capital’s budget for 2025 is $56.9 billion, while in the largest region of the rf, the Republic of Sakha, it is only $3.65 billion. Gasification in moscow is 100 %, while in Salekhard – the center of gas production – it is only 36 %.