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Crimea: Putin Imposes Hidden Annexation Taxes on Russians

Trains are parked at the main station in Sevastopol, Crimea, in October 2008. Estimates have pegged the costs associated with Russia’s annexation of Crimea in March at $50 billion, but officials are starting to acknowledge the costs are likely to spiral upwards, as the local economy in Crimea appears headed for a crash. (Photo: Justyna Mielnikiewicz)

Vladimir Putin’s administration in Russia intends to cover the burgeoning costs of annexing Crimea by raiding taxpayers’ pension contributions, raising utility rates, and canceling major infrastructure-development projects and reallocating funds.

The Kremlin has decided to spend its entire federal-budget “anti-crisis fund” on propping up Crimea’s governing apparatus and economy in 2014. The bulk of the fund comes from Russians’ 2014 retirement contributions, totaling 243 billion rubles (about $7 billion). These funds now will not be invested, but rather “borrowed” by the government. The money will not be returned to citizens’ individual retirement accounts; instead, contributors are set to receive “retirement points.” These points have a monetary value that remains unclear, and which appears vulnerable to arbitrary manipulation by officials in charge of Russia’s government-run Pension Fund.

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Crimea: Putin Imposes Hidden Annexation Taxes on Russians

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