Russian economic elites are openly rebelling against the Kremlin’s ideas for rescuing the budget at the expense of citizens. At this year’s St. Petersburg Economic Forum, harsh criticism was leveled at the plan to reintroduce the childlessness tax, known from the Stalin era. At the same time, leading oligarchs admitted that the economy is sinking into stagnation, and investments are shrinking at an alarming rate.
This year’s St. Petersburg Economic Forum, traditionally a propaganda showcase of Russia’s successes, turned into a litany of complaints and warnings. Despite the Kremlin’s official optimism, the most important players in the Russian economy did not hide that the situation is critical. Nearly every speech at the forum was an alarm signal – from declining industrial demand to growing pressure on tax collection.
German Gref, head of Sberbank, stated outright that continuing economic growth under current conditions is „already a miracle.” He drew attention to four consecutive quarters of declining investment, which in his view heralds a deep structural crisis.
– We need to abandon pipe dreams about manual control and focus on real technological development – Gref added, directing his words at the Kremlin.
Business cuts investments, demand plummets
Even more blunt was Alexei Mordashov, owner of the steel giant Severstal and the richest man in Russia according to Forbes. He revealed that domestic demand for steel has fallen by 30 percent over three years, and his conglomerate had to cut a quarter of its investment portfolio.
– Cash flows have turned negative – Mordashov admitted. He added that nearly all business leaders in Russia are revising their development programs, which portends a further collapse in GDP.
According to forum participants, instead of supporting entrepreneurship, the state is reaching for increasingly repressive tools. Igor Shuvalov, head of the state development corporation VEB.RF and former deputy prime minister, criticized the idea of reintroducing mandatory job placement for graduates and the childlessness tax.
– Building technological leadership based on total state control instead of freedom is doomed to fail – Shuvalov said.
The Specter of the Stalin-Era Tax Returns
The greatest controversy surrounds the proposal to reintroduce the childlessness tax, which was in force in the USSR under Joseph Stalin. The authorities are considering it as a way to increase budget revenues while simultaneously pressuring demographic growth. Andrei Makarov, an influential Duma deputy, pointed to another problem: the arbitrariness of law enforcement agencies and the mass seizure of private assets on dubious legal grounds.
– This drastically lowers investor confidence – Makarov assessed.
Experts point out that the idea of a childlessness tax is just the tip of the iceberg. In Russia, social opposition is growing against the shrinking of civil liberties and increasing fiscal pressure. The coming months may bring an escalation of tensions between business and the Kremlin, which is seeking money to finance the war and maintain control over the economy.
