CONSEQUENCES OF INCREASING THE CAR RECYCLING FEE IN THE RUSSIAN FEDERATION
Introduction: the issue of increasing car recycling fee accompanied by a concurrent introduction of a compensating subsidy to domestic car producers has been recently widely discussed in Russia. Such a measure might be viewed as a protectionist measure disguised as the need to comply with environmental standards. This raises the question of this policy expedience. Objectives: to analyze the consequences of increasing the car recycling fee in the Russian Federation. Methods: comparative analysis, generalization and extrapolation of results, econometric estimations. Results: data analysis from various sources (Association of European Businesses, Federal Customs Service, Federal State Statistics Service, Federal Tax Service etc.) shows that effective car recycling fee rate have been growing much faster than inflation or real income index. Tax burden of the recycling fee in car prices is sufficiently high (15-30 %). A 25 % increase in recycling fee rate leads to a 4 % car prices increase in the most likely scenario, which, in turn, will foster a 6 % decrease in car demand. Cumulatively, this may lead to a 17 % increase in recycling fee tax revenue, the largest part of which will have to be returned to domestic car producers. Conclusions: despite the presence of the compensating subsidy to domestic car producers, domestic cars prices will also rise by 4 % to maintain price parity with imported cars. The price increase will mostly affect the wellbeing of low-income households. In addition, taken the current rates structure, an increase in recycling fee will stimulate the use of illegal schemes of importing foreign cars to Russia by individuals. There are significant negative consequences of increasing the car recycling fee in the Russian Federation, and therefore it should be recognized as inappropriate.