Russians turn to cash, putting more strain on slowing wartime economy

"This is a very worrying moment... We are not seeing cash return to the banking system through cash collection, ATMs or self-service terminals," said Skvortsov, in comments cited by state news agency Interfax. "It is staying in people's hands".About 6% of entrepreneurs said they had turned to "grey schemes" to cope with the new tax burden, including avoiding cash-register receipts, according to a May survey by Russia's largest SME association, Russia" class="entity-link entity-organization" data-entity-id="167437" data-entity-type="organization">Opora Russia.Cash payments help businesses understate turnover to stay below the VAT threshold, while cash wages help them avoid payroll taxes.Cracking down on the shadow economy has become a key goal for the Kremlin. Before the VAT rise took effect, Putin warned the new rules must not push firms into the shadows and called for a "radical reduction in illegal employment"."One arm of the government is trying to squeeze as much money as possible out of people through higher taxes, fines and other charges," Alexander Kolyandr, a non-resident senior fellow at the Center for European Policy Analysis, told the BBC."But another, in trying to counter so-called terrorist threats, is undermining that strategy by making it harder to collect tax," he said, referring to the mobile internet shutdowns.The Soviet-era instinct to keep money "under the mattress" is making a comeback despite double-digit returns on bank deposits, which have been kept high as the central bank battles stubborn, war-fuelled inflation.