By Fred Weir, Christian Science Monitor, 4/20/26
Launching a public protest in Russia amid wartime restrictions can get a person fined and thrown in jail. But Lialia Sadykova, who runs a network of beauty salons in St. Petersburg, stumbled upon a work-around by accident a couple of months ago.
Ms. Sadykova was on the website of her organization, the Association of Beauty Industry Enterprises (APIC), posting an emotional commentary about the deteriorating economic conditions she was experiencing in Russia. Suddenly, others started joining in with tales of hardship.
A “digital flash mob,” where people congregate in online forums and chat rooms to share their grievances, was born.
The group began initiating actions on wider platforms. On VKontakte, the Russian version of Facebook, Telegram, and Instagram, users began posting their stories and reposting others’ as comments mounted. Their audience on Instagram at one point reached 360,000. “It’s become the symbol of thousands of small businesses on the verge of closure because of drastic changes to the rules of the game. We never had any idea it would be so big.”
Digital flash mobs have become a key tool for small-business owners in Russia to draw attention to a near-perfect storm of economic headwinds threatening to pull them under. Thanks in large part to the Russian government’s struggles to pay the escalating costs of the 4-year-old war in Ukraine, businesses are facing sky-high interest rates, labor shortages, falling consumer demand, persistently high inflation, toughening regulations, and huge tax hikes.
Russian government budget deficits have been exploding, with falling oil revenues in the first part of this year and growing war spending. They are estimated to be as much as 3.5% of gross domestic product this year. President Vladimir Putin recently admitted that Russia’s GDP shrunk by around 2 percentage points in the first quarter of this year. Taxes have been hastily raised, and formerly generous exemptions for small businesses have been retracted. Hence the flash mobs.
“The tax burden for the majority of small businesses has leapt between 30 and 80 times,” says Ms. Sadykova. “In our industry, profit margins are around 5 to 7%, and now are we supposed to work just to pay taxes?”
“We are Mashenka”
The protesters were inspired by the experience of one small-business owner, Denis Maksimov, who complained personally to Mr. Putin during the president’s annual public digital “town hall” last December. He said that he was being forced to shut down his chain of bakeries – named “Mashenka,” after his daughter – due to the tax burden.
The publicity, and a surge of new customers that followed it, convinced him to keep his bakeries open. Later, the government acted by temporarily exempting a whole class of food businesses from the newly raised value-added tax.
The flash-mob protesters call themselves “We are Mashenka” to underscore that they are in the same boat as Mr. Maksimov. “It’s great that the situation has improved for small businesses in public catering, but the problems remain for all the rest of us, whether we are in retail trade, services, or small educational establishments,” says Ms. Sadykova.
She adds that the changes to the tax code, which include a rise in the VAT, as well as the progressive removal of exemptions that were previously in place for small businesses, was sprung on them almost without warning. “When you’re in business, you have to be able to plan ahead,” she says. “They’ve changed the tax rules three times in the past four years.”
The digital flash mobs organized by APIC asked small-business owners to come online and tell their stories. “Mashenka represents hundreds of thousands of entrepreneurs across the country,” reads the movement’s mission statement, “[who] believed that if you work honestly, you can survive. … This is a systemic story that is happening right now.”
Ms. Sadykova says their online actions had at least half a million participants over two weeks earlier this year.
Kalinka Shoe Stores posted a typical commentary in an impromptu conversation on VKontakte in late January: “We remember [past] crises and hard times, but then our problems were caused by objective reasons. Now we are being ruined with laws and ill-considered decisions, which are made by specific people who think that they can raise a lot of money at once. … Listen to us before it’s too late! Because there are a lot of us ‘mashenekas’ out there.”
Russia’s gray economy
Small businesses in Russia have always existed on the margins, often living in semilegal limbo and subject to extortion from predatory bureaucrats. They are usually last in line for assistance from a state that favors big business, and the first to go bankrupt when an economic shock hits, such as the crisis of 2008 or the pandemic lockdowns. But circumstances have steadily worsened over the past year, with about a quarter of small businesses reporting that they were on the verge of bankruptcy in 2025, and almost a third saying so today.
Ironically, this crisis hits at a time when Russia has a record number of registered small businesses: 6.5 million, accounting for about 20% of GDP. The government has spent several years trying to coax them out of the gray economy with special tax rates, VAT exemptions, and easing of state regulations and inspections. Where official corruption and graft were routine in the past, few entrepreneurs complain about it today.
It’s a complicated issue, say economists, since many small businesses still have one foot in the gray economy and practice various dodges to hide income, avoid regulations, and stay below the tax collector’s radar. One common scheme is for a “medium-sized” business to break itself up into several smaller enterprises in order to take advantage of special income tax rates of 6% for small entrepreneurs and 4% for self-employed people.
“Our prime minister [Mikhail Mishustin] is a former head of the tax service, and he seems intent on squeezing more out of the small-business sector,” says Oleg Buklemishev, a prominent economist. The state also seems determined to roll back the contraband goods, unreported employment, and tax evasion of the gray market, which is estimated to be responsible for up to 25% of Russia’s GDP.
“However, the recent decision to make allowances for the catering industry suggests the government is listening, and might be prepared to show more flexibility,” Mr. Buklemishev adds.
Dmitry Gorelov is proprietor of “Northern Fleet Motors,” which he named after his favorite Russian rock band, “Northern Fleet.” He stands here in his workspace in eastern Moscow, April 6, 2026.
“All the risks are on me”
Dmitry Gorelov started his automobile service center, Northern Fleet Motors, six years ago. He says he keeps his head above water, but can’t expand mainly due to the shortage of skilled labor. Since the war began, workers can earn very high salaries in the military sector that he can’t match.
He pays the 6% tax rate and says he doesn’t feel any pressure from government inspectors. He subsists thanks to his loyal customer base, plus fresh clients that find him through new services such as Yandex Service, a kind of online Yellow Pages that links businesses directly with customers.
Mr. Gorelov says he works an average of 12 hours a day, but he enjoys it and he’s doing fine so far. “Some expenses are rising, but I just raise my prices to compensate. I make more than I would as a hired worker, but then all the risks are on me. No one will help me with my problems.”
With thousands of small-business owners signaling deep and even existential distress, analysts say that authorities may ease up a bit, but are unlikely to fully roll back the tax hikes.
The war in the Middle East and accompanying spike in energy prices may bolster the state budget briefly. But no one expects it to last.
“A lot of small-business people find themselves in a pre-bankruptcy situation. Popular moods are changing,” Communist Party Duma deputy Mikhail Matveev noted on his YouTube channel recently. “This is serious. When people can’t see any light at the end of the tunnel, that’s not just an economic problem.”