Russia's metallurgical and chemical industry tells Kremlin adviser to buzz off after he proposes higher taxes to fund Putin's new social spending

Kremlin adviser Andrey Belousov met this week with representatives from the metallurgical and chemical companies he recently proposed taxing extra to raise 500 billion rubles ($7.4 billion) needed to implement Vladimir Putin’s new social spending program.

Shockingly, the companies haven’t embraced the opportunity to hand over their profits, and they’ve proposed an alternative plan where they voluntarily invest some of their money in social projects selected by a special working group. Belousov says he hopes the industry will invest between 200 and 300 billion rubles. “That would be pretty good,” he told the newspaper Vedomosti on August 24.

Were these taxes ever going to happen for real?

• The stock market certainly worried about it. In mid-August, within 24 hours of Belousov’s suggestion, Russia’s super-rich metal and mining tycoons saw $3.1 billion “wiped off their fortunes,” as Bloomberg put it. The government has been kicking over every rock, trying to find the money to pay for Putin’s latest “May Orders,” which call for boosting Russian life expectancy and reducing poverty. Raising the country’s value-added tax was part of this hunt for cash.
• Economists believe the project’s total price tag is at least 8 trillion rubles ($118.7 billion). If the money doesn’t come together, however, officials can always fudge their numbers to fake better demographic statistics. According to Vedomosti, that’s at least partly how Russia implemented Putin’s 2012 platform.