...that the water, heating and housing subsidies in Russia are regressive, with most of the benefits going to the upper class?
This graph shows the level of the subsidy in household costs in rubles per month due to allowances and privileges for housing, water supply, sewerage and heating subsidies in the Russian Federation. The table shows the share of the total spending on housing subsidy by decile. Except for the bottom decile, the share per deciles increases sharply from the fourth decile on. The largest share of the total subsidy goes to the top decile.
Reforming the systems of housing and utility payments is important for a number of reasons. First, subsidies by the various levels of government absorb a large share of their resources. Second, a number of unfunded mandates remain that compromise efforts to reform the energy sector. While the federal government has mandated reductions in housing and utility costs for various population groups, it has not provided the necessary funds to the local authorities to accomplish this task.
The result is that the utility providers have to subsidize part of the cost reductions. This is in addition to what they absorb in the absence of full cost coverage not directly reimbursed by the government. Third, while the transfer payments play a role in mitigating poverty, they are neither well targeted nor very effective in reducing poverty. Most of the subsidies for housing services pay for privileges that do not go to the poor. The household allowances that go the poorer households are incomplete in coverage due to low take-up and poor targeting.
RSS