Yabloko FB page, 18.06.2018

Experts believe that an increase in VAT from 18 to 20 per cent will entail a price increase not in 2019, but already in the Fall of 2018. The burden on the construction sector, automotive industry and machine building will increase most – by 5 – 7 per cent. This means that apartments and cars will rise in price especially.

Here goes the forecast by Sergei Ivanenko, economist and Deputy Chairman of Yabloko:

– The VAT is the most collected tax, it is virtually impossible to evade it, so the government, in the conditions of economic collapse, puts an emphasis on it, rather than, say, income tax. Obviously, the growth of VAT will be shifted onto the consumer, consumers of any goods. And first of all, prices will grow in the most monopolised sectors – provision of heat, electricity, garbage disposal, etc. Everything that people can not abolish under any circumstances.

Businessmen will suffer as well. Demand on behalf of the population is falling, people are saving on many things, and even a small increase in prices will lead to rejections from purchases and a serious drop in turnover. By the way, it is interesting that for the first time Russian businessmen opposed the pension reform, correctly fairly pointing out that this would entail depletion of the population and a decrease in the consumer activity.

The result is a multiplicative effect: low demand, raising of taxes, and a new decline in demand. It is a vicious circle. The government’s measures are not only unpopular – they lead to a dead-end. Money can be collected once, but in this way one cuts his own throat. Right now, when we have a zero growth of the economy, we must reduce taxes.

Source