Russia will create a federal fund to upgrade its roads under a national road building programme by increasing taxes on drivers.

Russian finance minister Alexei Kudrin said the main sources of funding will come from additional gasoline and vehicle taxes.

The minister said an annual tax hike of RUB1/liter ($0.03/liter) of gasoline over three years will not fuel inflation, according to

Russia’s 2011 budget is expected to allocate RUB377bn ($12.5bn) for road building and maintenance, with the allotment rising to RUB408bn ($13.5bn) after two years.

The country plans to upgrade 45,000km of its 54,000km federal highways and construct 14,000km of new roads by 2015.