Time to read: 10 minutes(s)

Author: Tatyana Rybakova

Tax increases, both direct (VAT) and indirect (recycling and technological fees), were intended as a way to replenish the budget. However, the government apparently understands that, with the economy stagnating and threatening to slip into recession, tax revenue growth may not materialize. Therefore, the Federal Tax Service is moving to tighten audits and extort taxes and fines. And not just from businesses—starting next year, citizens will also face unpleasant explanations from tax authorities.

Many opposition figures, including the late Alexei Navalny, have repeatedly noted that Russia has never ratified Article 20 of the UN Convention against Corruption, which includes the concept of "illicit enrichment"—a situation where an official cannot explain the discrepancy between their expenses and their official income. The article remains unratified and is unlikely to change in the foreseeable future. However, spending controls are being introduced in Russia. However, these controls apply to ordinary citizens.

Prove that you are poor

For example, to receive child benefits in the Moscow Region, Yamalo-Nenets Autonomous Okrug, and Khanty-Mansi Autonomous Okrug, you'll have to carefully ensure that no "extra" funds are deposited into a family member's bank card. Or that the interest rates on bank deposits aren't too high. From January 1 to December 31, 2026, a program will be held in the Moscow Region, Yamalo-Nenets Autonomous Okrug, and Khanty-Mansi Autonomous Okrug. experiment Based on the assessment of the amount of money received in a family's bank accounts and deposits. After a family submits an application for benefits, the Social Fund will request information from the Federal Tax Service and banks about the accounts, deposits, and transactions of all family members. If the total amount of income received in a family's bank accounts and deposits over the past year is twice their official combined income, the benefit will be denied. A denial will also occur if the funds received are equal to twice their income. The experiment is being conducted under the auspices of the Ministry of Labor and is based on practice in Moscow: starting in 2022, the income of social benefit applicants will be calculated as the sum of all funds received in their accounts during the year preceding the month of application. The percentage of benefit denials is not disclosed, but experts they say about 40% failure rate.

They'll count everything: salaries, pensions, benefits, scholarships, alimony payments for all family members, income from financial transactions, and other income. Even if, for example, a student son decides to work part-time in the evenings to afford to take his girlfriend out to a café, he could easily deprive his parents of child support if he inadvertently exceeds the poverty level they're entitled to. Exceptions are made only for individual entrepreneur accounts, transfers between family accounts, loans, and proceeds from the sale of a car or apartment.

They'll come not only to families with children, but also to unemployed citizens. In Moscow, tax authorities have already require explanations from those who, while listed as unemployed, made expensive purchases. However, tax lawyers say such audits have already begun countrywideTax authorities are scouring social media, paying attention to those who post photos of their "high life"—from trips abroad, with expensive purchases. They say they're even using AI for this monitoring. Then they begin "developing" suspects: if their official income doesn't match their expenses, they're summoned to the tax office for an explanation. Those at risk are those with no official income or whose income doesn't match their expenses. If they can't fight back, they assess arrears and fines. Since November 1, this process has been simplified: the money is debited from your tax account, and then it's off to the courts.

The hunt for "gray" and "black" salaries is underway at the same time: Ministry of Labor boasts720 citizens were caught receiving money "under the table" in the first nine months of this year. The number will likely increase in the future, as cooperation with the Federal Tax Service is being established: tax authorities will monitor the unemployed, and the Ministry of Labor will identify those receiving payments "under the table."

Workers and businesspeople haven't been forgotten either: now even recommending tax optimization is prohibited, according to Moscow's Presnensky Court, following a lawsuit filed by the prosecutor's office. blocked Three websites offering assistance in preparing tax returns with the possibility of reducing VAT.

Well, in order to scare those who haven’t been caught, they are introducing amendments to the Criminal Code, increasing fines for economic crimes by 1,5–2 times.

Friends get everything, everyone else gets the law

Counting out the pennies received by families claiming child benefits, catching janitors and loaders who receive cash in hand, as well as effectively banning tax optimization for businesses that are already barely standing, seem petty. But against the backdrop of incredible results searches of officials who have committed thievery (or fallen into disgrace), of the second and third echelons, and even more so - information Regarding the luxurious lifestyle of "servants of the people," this seems not just petty, but a deliberate policy. There are "our own," who can do anything—and then there are the rest, who we'll fleece so that "our own" can live comfortably. This state of affairs has been around for a long time, but now the active counting of money in the pockets of ordinary citizens could backfire.

Even back when Navalny and the FBK were releasing their exposés on the lavish lifestyle and corruption of the elite, political scientists noted that, despite millions of views and even protests (like the "He's Not Dimon to You" protest), they had little impact on public sentiment. The reason was simple: there was an unspoken agreement between the government and society: we don't stop you from being as slick as you can, and you don't stop us from getting rich as we can. As a result, the average person wasn't so much outraged by the ostentatious luxury and corruption of those in power as they were upset by the limited or nonexistent opportunities for illegal enrichment. "Everyone steals, some just can't manage it"—that was the consensus. Until now.

Now, if the authorities get serious about monitoring citizens' spending, the consensus could quickly change. It's one thing to see a lavish palace and luxury car belonging to an official whose official salary is only slightly higher than yours—but then you're also guilty of something. It's quite another to witness the same thing when the tax office asks you for an "extra" 10 rubles, you're denied benefits because you're a few thousand rubles above the poverty line, and money is debited from your account for a violation you didn't commit.

Historical experience

The UN Convention against Corruption, with its Article 20 on control over expenditure by public officials, was adopted in 2003 for a reason. In the 80s and 90s, control over citizens' spending, in one form or another, existed in many countries. As a rule, this included welfare recipients, sometimes under very strict control.

In the early 90s, some friends invited me to Denmark, where they had just received asylum. It wasn't a long trip: I was living in northern Poland at the time, and all it took was a ferry ride across the Baltic. Copenhagen was wonderful, I met some Danish friends of my friends, who showered me with gifts, visited the Royal Opera, and left full of the most pleasant impressions. A month and a half later, representatives of the social services and tax authorities came to my friends' homes and politely asked them to explain how it was that their guest had spent more than she had declared at the border. Were they spending their benefits when they weren't supposed to? Were they earning illegal income? It was my fault, having, on the advice of my Russian "well-wishers," declared the minimum amount upon entry. I had to write a letter of repentance, notarized, and friends of friends confirmed that they were the ones who invited me to the café, bought me tickets, gave me gifts, and treated me to dinner. It was a nerve-wracking six months. My Danish friends never invited me over again.

Of course, not all countries had such strict controls as Denmark, which at the time had some of the highest taxes and social benefits. But many attempted to implement similar controls over citizens' spending in one form or another. This led, first of all, to general discontent, and most importantly, to close scrutiny of the lives of officials and politicians. Ultimately, the UN Convention was adopted, after which officials, while not entirely stopping abusing their positions, did begin to do so less openly. Incidentally, the ostentatious modesty of Europe's wealthy is largely a result of this very campaign. Driving an old car, dressing modestly, and living in an outwardly unremarkable house was profitable—and over time, it became socially encouraged.

However, neither scrutinizing citizens' pockets nor monitoring officials has yet produced lasting results. Scandals involving Japanese "centenarians," when it was discovered that relatives were continuing to receive pensions for long-deceased retirees, and similar "centenarians" in the American pension system, uncovered by Elon Musk during his short-lived Operation DOGE, demonstrate that people are essentially the same everywhere, and are willing to take advantage of the slightest opportunity. And the currently escalating scandal with the "most successful trader" Nancy Pelosi, former Speaker of the House of Representatives, as well as scandals The Trump family's crypto projects show that officials and politicians have learned to skillfully circumvent the restrictions of Article 20 of the UN Convention.

Long arms, poor eyesight

A tax lawyer, who requested anonymity, is rather skeptical about the effectiveness of total control over citizens' spending. "The law has a long arm, but its eyesight is weak," he says.

Our interviewee dismisses the ominous reports about AI being used to identify unemployed money-grubbers as a publicity stunt. "Of course, AI can filter social media feeds for photos of people in expensive cars, luxurious villas, and expensive resorts. But no one can prove you took the photo in front of your own car or villa, and bragging is not prohibited by law," he says. You can always claim that your expensive trip was paid for by friends or wealthy relatives. "And in general, I can hardly imagine tax officials coming to a large family in the North Caucasus and demanding to know where the money for expensive cars and houses came from. Because it could turn out to be just the right family, from the right clan, registering the right assets in their name," the lawyer laughs.

In fact, Russian citizens mastered similar tricks back in the 90s: "proper" businessmen never had anything of significance—everything was registered in the names of their wives, sisters, mothers, fathers, mothers-in-law, and great-uncles. Russian officials and politicians are now practicing the same thing. And when the authorities tried in 2020 контролировать The initiative quickly petered out, not least because of the COVID-19 quarantine. It's simply a case of hiding being easier than finding and proving. This is precisely why the West has focused on officials: citizens are only likely to be scrutinized if there are other suspicions. For example, it was precisely the luxurious lifestyle, disproportionate to his income, that attracted the CIA's attention to the Soviet-Russian spy. Aldrich Ames.

However, the owner of a small regional service chain, who wished to remain anonymous, reports that the tax authorities are now "going berserk." According to him, the tax authorities are indeed acting as if they've been tasked with squeezing out as much tax as possible. "Now it's not just locals who come to conduct audits—the Federal Tax Service has created a practice of cross-regional audits, whereby employees from one region conduct audits in another. On the one hand, this optimizes their work, of course: they can conduct large-scale audits with these combined 'flying squads' without putting too much strain on staff. On the other hand, you can't approach someone else's employee with an offer to 'resolve the issue.' And thirdly, they often don't understand local specifics and don't want to know, but they're determined to prove they're the real deal here, and everyone else is who they are. The result is simply terrifying," he complains. How long will the tax authorities and other agencies have the capacity to conduct such mass audits? It seems likely, just long enough to ensure all the budget figures add up and the deficit remains at an acceptable level. Our interviewee, a tax lawyer, gives the campaign about a year. "They might finish sooner if the population gets seriously scared and gives in. Or if there are a couple of scandals involving the 'wrong' people being hijacked," he believes. However, this doesn't make things any easier for those currently forced to explain themselves for extra rubles of income.

_{Illustrations generated using AI.}