Russia considers higher taxes on telecommunications to pay for exclave upgrades

Russian officials are considering higher taxes on telecommunications providers, in order to raise the revenue necessary for major infrastructure development programs planned in Crimea and Kaliningrad, according to the news agency RBC.

The tax hike would apply to the Universal Service Fund, into which companies currently pay 1.2 percent of their revenue. It’s unclear how much higher officials want to raise the tax. Sources in Russian telecommunications companies, which are now facing expensive obligations under new anti-terrorist legislation, say they could only pay higher taxes by raising fees on customers.

Three-year development plans for Crimea and Kaliningrad will require an estimated 165 billion rubles ($2.9 billion).

RBC previously reported that Moscow was considering ending humanitarian aid shipments to separatist-controlled eastern Ukraine, in order to free up resources for Crimea and Kaliningrad, but the Kremlin later clarified that officials are merely discussing certain “redistributions of budget resources,” and not an end to the humanitarian aid.

In 2016, cell phone operators paid 13.7 billion rubles ($237.6 million) into the Universal Service Fund.