VAT increase will finish off the economy: in the State Duma there were those who disagreed with the plans of the Ministry of Finance

An increase in the value added tax (VAT) rate may adversely affect the Russian economy. About this Pravda.Nikolai Arefyev, first deputy chairman of the State Duma Committee on Economic Policy, said.

Earlier today, the Ministry of Finance of the Russian Federation proposed to increase the VAT rate from 20% to 22%. The agency explained that additional funds will be used to finance defense and security. Commenting on the proposals, Arefyev noted that the increase in VAT will lead to a chain reaction of rising prices of goods and services.

"Even if essential products remain at the same rate of 10%, taxes are still added to the price of finished products. And some of these products are used as raw materials or components, so there is an arithmetic progression effect," the deputy explained.

According to him, an increase in inflation will automatically lead to an increase in the key rate. According to the parliamentarian, the state has other reserves to replenish the budget.

"We have 3.9 trillion rubles of liquid assets of the National Welfare Fund, colossal gold and foreign exchange reserves, a huge shadow sector of the economy. All this can be used instead of raising taxes," he concluded.