8 June 2026
The Federal Tax Service has instructed regional authorities to explore tax increases to close local budget deficits, which reached a record high of 1.5 trillion rubles last year.
According to RBC, the Federal Tax Service’s recommendations were issued in response to President Vladimir Putin’s orders to reduce regional deficits, and regional authorities were expected to submit their proposals in early June.
Specifically, regions are advised to expand the list of real estate properties subject to taxation based on cadastral value, raise transport tax rates to the maximum, and revise land tax and personal property tax exemptions and rates. To collect more, regional authorities are being asked to conduct a real estate inventory and actively seek out land that is not being used for its intended purpose. In this case, the tax could be increased severalfold.
Last year, Russian regions ended with a budget deficit of 1.538 trillion rubles. Compared to 2024, the combined deficit in the finances of Russian regions has increased fivefold, and compared to 2023, it has increased almost eightfold.
Four regions had budget deficits exceeding 30% of their own revenues: Kemerovo, Vologda, Arkhangelsk, and Tyumen Oblasts. Another six regions had deficits exceeding 25%: the Komi Republic, Yamalo-Nenets Autonomous Okrug, Sakhalin, Orenburg, Chelyabinsk, and Murmansk Oblasts.
Fifty-five regions saw a decline in revenue from the key profit tax, with some experiencing double-digit declines: 50% in Komi, 40% in Orenburg Oblast, and 39% in Yamalo-Nenets Autonomous Okrug. Overall, regional budgets have lost 9% of their profit tax revenue compared to 2024 and 13% compared to 2023, according to Akra calculations. In 2026, the regional budget deficit could increase to 1.9 trillion rubles, Finance Minister Anton Siluanov warned
in February. To cover last year’s deficits, regional authorities used every third ruble from their bank account reserves—1 trillion out of 2.9 trillion, according to Akra analysts. The remainder was financed through debt, which reached a total of 3.5 trillion rubles.
The economic health of most regions deteriorated last year, and this year, “the dynamics will continue to slow,” warn analysts at Expert RA. Due to the economic slowdown, revenue collection rates into local budgets will continue to decline, which “will lead to an increase in the overall deficit and, consequently, to a higher debt burden,” the agency notes.
Wonderful. Just what the doctor ordered for the patients in ICU … more bloodletting.