Nezavisimaya Gazeta published an article based on the Gaidar Institute’s “Monitoring of Russia’s Economic Outlook”: “The federal budget still has a margin of safety, but balancing it is becoming more difficult”.
The article analyzes the factors driving the growth of “non-oil and gas” revenues in the federal budget in 2026. According to the author of the report, two factors played a key role: an increase in the tax burden—including a rise in the VAT rate and changes to the rules for businesses under the simplified tax system—as well as inflation, which turned out to be higher than the level projected in the budget.
As noted in the study, accelerating inflation expands the tax base, primarily for VAT, which helps meet the budget revenue target. However, this source of growth cannot be considered sustainable. If inflationary pressures ease and the economy continues to slow, the federal budget could fall short of significant tax revenue targets.
“With higher inflation, the tax base grows, primarily for VAT. Therefore, moderate inflation above the forecast contributes to meeting the VAT target. And for other taxes as well, inflation pushes the taxable base upward: for example, wage indexation leads to additional growth in personal income tax,” — explained Ilya Sokolov, Leading Researcher at the Gaidar Institute and author of the economic monitoring report, for Nezavisimaya Gazeta.
According to the researcher’s estimate, without inflationary support, the budget could fall short of Rb600 to 800 bn in VAT revenue by the year-end. In addition, projections for corporate income tax and personal income tax revenues may also prove to be overestimated if economic activity continues to decline. The federal budget still has some room to maneuver, but maintaining its balance is becoming increasingly difficult.