Taxes, Tariffs, and Prices: the kremlin Intensifies Extraction of Money from the Population’s Pockets

russian inflation is increasingly becoming not a side effect of economic processes, but a deliberate instrument of state policy. The formal explanation given by the ministry of economic development – an increase in VAT from 20% to 22% – seems convenient, but it is not convincing. Businesses began raising prices last year and used the tax change only as a pretext for a new round of price increases. The actual increase in costs significantly exceeds 2%: logistics services have already risen in price by 10–20% since the beginning of the year.

VAT, with its multiplier effect, affects the entire economy – from the purchase of raw materials to the end consumer. As added value increases, so does the absolute amount of tax. Delays in refunds, conflicts with tax authorities, and additional transaction costs only add to the burden. Ultimately, all these costs are passed on to the buyer without exception.

Regions experience this pressure unevenly, but everywhere – painfully. In the Far East, inflation is traditionally driven by long logistics and imports from China and Southeast Asia: prices for fruit and vegetables and electricity are rising. In dagestan, tariff policy is added to the logistical problems – tariffs will increase by almost 20% in October. chuvashia is the leader in tariff increases, where some items may rise in price by up to 33%. Overall, the increase across the country ranges from 8% to 22%, and these are only average figures.

The key point is that tariffs are rising not only for the population but also for businesses. This means a new round of inflation, as the transport component in certain goods, particularly bread, accounts for 70–80% of the cost price. The rise in logistics costs is automatically reflected in retail prices. Postponing the main tariff hike until after the elections to the state duma only underscores the controlled nature of this process.

Even the recession in civilian sectors, wage cuts, and declining consumer demand are not acting as a deterrent. On the contrary, there is a risk of stagflation – a combination of economic decline and rising prices. The main driver of inflation remains government actions: taxes, excise duties, customs duties, tariffs, and fines.

For the kremlin, the issue is not about reviving the economy, but about finding money. If businesses start to close and tax revenues decline, the pressure will easily be shifted directly to the population through new tax rules, fines, or an expansion of the tax base. Financing the war requires resources, and the state is systemically increasing the  extraction of these resources from the pockets of its own citizens, turning inflation into a hidden tax for everyone.