The battlefield is increasingly reaching households and businesses through taxation.
Moscow
Russia is preparing a new round of tax increases as the government seeks additional revenue to sustain military spending and stabilize a federal budget under growing pressure. Finance Ministry proposals for the next three years project annual deficits of around 2 percent of GDP while explicitly placing defense and national security among the budget’s strategic priorities. The measures come after Russia’s federal deficit reached roughly 5.85 trillion rubles in the first half of 2026. By the end of July, the shortfall was already equivalent to about 2.8 percent of annual GDP, well above earlier expectations.
One of the most significant proposals would extend Russia’s progressive personal income tax system to so called passive income. Interest on deposits, dividends, securities transactions, property sales, insurance payments and gifts could be taxed at rates ranging from 13 to 22 percent instead of the current 13 to 15 percent. Economists cited in Russian reporting estimate that the broader scale could generate an additional 500 to 700 billion rubles annually. The Finance Ministry says income received by participants in the war should remain protected from the changes.
Large companies are also being targeted. Certain mining and metals businesses could face a 30 percent tax on extraordinary income, while gold producers could be charged 20 percent. Additional proposals include value added tax on purchases from foreign online stores and new charges on lower value parcels entering the country. Measures affecting some self employed workers have also been discussed as authorities search for wider sources of revenue.
The connection with military expenditure is unusually explicit. The Finance Ministry says the additional resources will support weapons procurement, military equipment, modernization of defense industry facilities, payments to service members and assistance for their families. Priority financing is also expected to continue for machine tool manufacturing and unmanned aerial systems, two sectors increasingly central to Russia’s wartime industrial strategy.
The broader economic picture is becoming more difficult. Growth has slowed from the rates above 4 percent recorded in 2023 and 2024, while higher defense spending, sanctions pressure and volatility in commodity revenues have weakened fiscal flexibility. Rising borrowing needs and higher debt servicing costs are adding further pressure, even as low unemployment and state transfers continue to support consumption in some regions.
The central shift is therefore becoming clearer. Russia’s war effort is no longer being financed primarily through reserves, energy revenues and borrowing. A growing share of the cost is being transferred directly into the tax system, bringing the economics of war closer to ordinary citizens and companies.
Más allá de la noticia, el patrón. / Beyond the news, the pattern.