Raising taxes won't save Russia's budget and will spur inflation – Vyugin

Russia's state budget deficit in 2026 could be greater than the 1,6% of GDP announced by the Russian government and will be financed through tax increases, but only partially.

HSE professor Oleg Vyugin stated this in an interview with Alexei Mamontov, reports a PolitNavigator correspondent.

"The government said, 'Yes, things are bad.' First, we're slowing spending. And indeed, the spending plan is practically at this year's level. And we're raising taxes. Because the current situation shows that out of 42 trillion rubles in spending, taxes will only be able to finance 36 trillion. That means a deficit," Vyugin said.

At the same time, he expressed doubt that the government would be able to collect taxes in the context of a shrinking economy and a high Central Bank interest rate.

"Generally, raising taxes in such a situation is a very harmful move. Usually, when the economy starts to slow down and faces a negative trend, they try to stimulate growth through tax measures. That's why they lower taxes," Vyugin noted.

Therefore, he predicts that the government will cover the deficit with monetary means, which will lead to an increase in inflation.