In today’s federal address, Putin announced that the referendum on the Constitutional referendum – which nullifies his Presidential terms, and implicitly defines Russians as the “state-forming” people of the Russian Federation – is to be indefinitely postponed from its original date of April 22 because the “absolute priority” is to be the “health, safety and security of our people.”
Like most of the world outside the US, Russia is to become more of a “socialist” country in the next six months, though the list of measures are mild relative to the policies getting adopted in much of Europe (e.g. UK to pay 80% of salaries up to a limit of 2,500 GBP for people who lose their jobs).
Here are some policies mentioned by Putin:
- The next week (March 28-April 5) is to be declared a holiday.
- All current social welfare and subsidies to be automatically prolonged for the next six months without having to re-submit documents.
- Extra 5,000 rubles per month for families with children under the age of 3.
- Minimal sick leave pay and maximal unemployment benefits to be fixed at the level of the minimum wage.
- Credit holiday for people whose incomes fall by more than 30%.
- Support for S&M businesses: Tax holiday on everything except VAT for the next six months, credit holidays in specific circumstances, postponement of debt collection on the part of creditors. Their social security tax of 30% is lowered to 15% permanently.
- Tax on income transferred offshore to be increased from 2% to 15%. This would necessitate revising some double taxation agreements. This is probably the most significant measure.
- Tax on the interest on bank deposits and government securities to be set at 13% for people holding 1 million rubles or more (will affect one percent of depositors).
This is perfectly adequate for a situation in which Corona doesn’t advance deeply enough to significantly shut down the Russian economy. However, there’d need to be stronger economic support if there are stronger and longer containment measures.
Cases are still low, though they are now rising alarmingly fast.
What Russia really needs to do ASAP is to accelerate mask production – it is currently almost impossible to find them in Moscow pharmacies, and they cost almost $1 per mask online (a twentyfold markup). Russia will produce 5 million masks per day by the first half of April, while China will donate 25.5 million (which is rather fair, as the Chinese bought up most of Russia’s stock in February, before export restrictions were in place). But really, production should be at least fivefold that amount. Taiwan, with less than a sixth of Russia’s population – which managed to keep coronavirus restrictions at just 47 cases throughout February, despite the intensity of air traffic with China – produces 13 million masks per day. It should then legally mandate the wearing of masks in crowded areas and fine people without them. This is by far the most cost-effective way to save both money and lives.