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World Bank says Russian liquor and tobacco taxes should rise as poverty jumps

The World Banks says the economic crisis is boosting poverty in Russia, with the number expected to increase by 5% this year to 17% of the population.

It says the unemployment rate will hit 13% by the end of the year, as it downgraded Russia’s GDP forecast – saying the economy will contract 7.9% this year – with a similar gap between government spending – and its income.

Zhelko Bogetich. The World Bank’s Chief economist for Russia, says Russia could boost the budget revenues through tougher tax policy.

“Essentially you try to review the tax base of these instruments and try to eliminate any unnecessary exemptions, and special exceptions that reduce the tax base, right, that’s one. And the other, you could review some of the levels of excises, especially so called sin taxes – the liquor and tobacco taxes for example – that are usually very good revenue instruments in most countries, and in Russia they tend to be lower.”

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