State Duma votes to hike Russia's VAT by two percent

State Duma deputies have adopted the third and final reading of legislation that will raise Russia’s Value Added Tax (VAT) from 18 to 20 percent. The only party to support the initiative was United Russia, whose members recently forced through the first reading of controversial legislation to raise Russia’s retirement age. Once the Federation Council and President Putin approve the legislation, Russia’s VAT will jump two percent, effective on January 1, 2019.

The higher tax is expected to net the federal government an additional 633.5 billion rubles ($10.1 billion) in 2019, 678 billion rubles ($10.8 billion) in 2020, and 728 billion rubles ($11.6 billion) in 2021. This revenue will help fund the government’s efforts to fulfill Putin’s latest “May Orders” to boost Russian life expectancy and reduce poverty. Economists believe the project’s total price tag is at least 8 trillion rubles ($127.6 billion).