1/ New data from the Russian government shows that Russia's middle class is increasingly being hollowed out by taxes imposed to pay for the war in Ukraine and can no longer to afford to buy new cars. At the same time, wealth is increasingly being concentrated at the top. ⬇️
2/ Since 2012, Russia has levied a recycling fee (утилизационный сбор, "utilsbor"), a one-time, mandatory payment charged on vehicles when they're imported into Russia or produced domestically. It's theoretically meant to cover the cost of environmentally safe vehicle disposal. 3/ With government revenues suffering from the effects of the war in Ukraine, the fee was drastically increased to cover the gap, with no pretence of environmental motives. After a 25% increase in 2021, it then jumped by 70–270% in 2023. Another 70-85% increase came in 2024. 4/ Yet more increases took effect in December 2025 when previously lightly-taxed imported vehicles were brought into the scope of the tax, increasing costs massively. A Toyota RAV4's fee went from about $45 to $12,000, and a BMW X5's from about $52 to $34,000. 5/ A further 10% increase across the board went into effect on 1 January 2026, to be followed by planned 10-20% annual increases in each coming year. This has made vehicles simply unaffordable for many Russians and has crushed the Russian car market. 6/ In 2025, the state budget anticipated raising 1.12 trillion rubles ($13.5 billion) from the recycling fee. This equalled about 3% of total federal revenue – a significant compensation for declining oil and gas revenue. 7/ For 2026, the revenue from the fee was forecast to rise to almost 1.65 trillion rubles ($19.7 billion), a 46.7% increase. However, in the seven months up to the end of July 2026, the Russian treasury has only collected 309.2 billion rubles ($3.7 billion). 8/ If this rate is sustained through December, potentially only 530 trillion rubles ($6.4 billion) may be collected – a 52% drop compared to 2025, rather than the expected 46.7% increase. 9/ The Russian blog 'Political Report' comments that this shows how buyers are "increasingly unable to afford the price of a new car, while luxury car sales have been growing for the seventh month in a row." 10/ "In one market, we are witnessing both the rapid impoverishment of the general consumer base and a record concentration of wealth at the top. 11/ "The average price of a new passenger car has risen to approximately 3.54 million rubles ($47,817). According to the Russian Association of Auto Dealers, such a car consumes the equivalent of 36 months of average income. 12/ "For an average family, a car becomes a purchase worth three years of average income, before loan interest, insurance, and maintenance. The increased recycling fee adds tens and hundreds of thousands of rubles to this price, and for some imported cars, significantly more. 13/ "Therefore, Russians in the mass market are not simply unwilling to finance their budgets through expensive cars. Many are no longer able to do so. In 2025, the new passenger car market lost 15.6% of its sales. Auto loans plummeted, while the average loan size increased. 14/ "Families whose current income is insufficient must take out ever-larger loans to buy increasingly expensive items. At some point, they simply exit the market. 15/ "At the opposite extreme, the price barrier is virtually nonexistent. In the first half of 2026, 369 new luxury cars were sold in Russia, 15.3% more than last year. This growth has continued for seven consecutive months. 16/ "In July, buyers purchased another 75 cars in this class. Rolls-Royce, Bentley, and Lamborghini are sold in a country where a mass-market new car already costs 36 times the average salary. 17/ "This coincidence has a direct impact on income distribution. In 2025, the richest 20% of Russians received 47.6% of all cash income, compared to 46.9% the year before. This 0.7 percentage point increase was the largest annual increase in the 21st century. 18/ "The share of the poorest 20% fell from 5.3% to 5.2%. The Gini coefficient, using the previous methodology, reached 0.422, an 18-year high. The top is taking a growing share of income at a record pace, while the bottom groups are receiving a smaller share of the overall pie. 19/ "The most dramatic change is occurring between them. The middle class has historically relied on its stable ability to buy housing and a car, vacation, and save after essential expenses. When a new car costs three years of the average salary,… 20/ …one of the most basic major purchases for the average household becomes a privilege. The family continues to be considered employed and may not be officially classified as poor. However, its actual consumer status is already declining. 21/ "The recycling fee accelerates this decline. The government increases the purchase price, hoping to extract more money for the budget. For a wealthy client, an extra million rubles might not change their purchase decision. 22/ "For the average family, an extra 100,000–500,000 rubles can completely close the deal. Therefore, the same measure barely slows down luxury while pushing out the mass buyer. 23/ "The fiscal collapse of the recycling fee and the growth of luxury sales are two sides of the same divide. The government expected to collect 1.65 trillion rubles from automobile sales, which the majority of the population no longer has at the same level. 24/ "The rich are getting richer at record speed and maintaining an expensive consumption model. The lower and middle classes are losing access to a car as a normal, major purchase. 25/ "The most dangerous thing is happening to the middle class: it doesn't instantly disappear from the statistics; it disappears from the market, which was previously one of the signs of its existence." /end Source: t.me