- Putin Plans Tax Hike to Finance War on Ukraine
- Defence and security spending take priority in upcoming budget
- Food, medicine, and children’s goods to retain 10% VAT rate
Russia’s Finance Ministry has proposed an increase in the country’s value-added tax (VAT) as part of its 2026 budget plans, aimed at boosting funding for its ongoing military operations in Ukraine.
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EKO HOT BLOG reports that according to the draft proposal, the standard VAT rate would go up from 20% to 22%.
The government says the increase is necessary to support what it described as its “strategic priorities” including defence, internal security, and welfare for soldiers and their families.
Despite the tax hike, officials insist that all existing social policy commitments will still be met.
The Finance Ministry also clarified that a reduced VAT rate of 10% will still apply to essential items such as food, medicine, and children’s products.
Military and security expenses already account for nearly 40% of government spending in the 2025 budget, reflecting Russia’s deepening focus on its war economy.
Large defence contracts and payments to military personnel have contributed to growth in certain sectors, but analysts say civilian areas of the economy are showing signs of pressure, with inflation biting into household income.
President Vladimir Putin’s full-scale invasion of Ukraine has now entered its fourth year, with no clear end in sight.
The proposed VAT increase still needs approval from the Russian parliament a step widely considered a formality in the country’s tightly controlled political system.
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