No, seriously. This is fiscal stimulus:
Amid a financial crisis that is cutting jobs and eroding growth, there is finally good news for Russians.
The head of the new state alcohol agency — gleefully dubbed the Ministry for Vodka by the press — is advocating cutting taxes on vodka to make the country’s national tipple more accessible, the Izvestia daily reported.
Igor Chuiyan, the former head of state alcohol monopoly Rosspirtprom, has been appointed head of the new federal agency for alcohol market regulation, or Rosalkogol for short.
Without citing its sources, the paper said he advocates slashing the tax on a litre of pure alcohol from the current 190.8 rubles ($A9) to 100 rubles $A4.50).
This would mean that the tax on half litre of vodka would be cut to around 20 rubles from the current rate of 38 rubles, it said.
There’s a health motivation for the tax cut too. The article reports that high taxes have created a large black market in counterfeit vodkas and resulted in dangerously adulterated products.
That’s not a problem here in the US, but there’s a case to be made that the most effective fiscal stimulus would be cuts in our most regressive taxes, like consumption taxes or the FICA/Medicare payroll deductions. Ed Glaeser argues the point here (previously linked on Friday’s sidebar).