Russia: Government wants to increase VAT for war

Moscow. Russia plans to finance its war against Ukraine by raising the value-added tax. For the 2026 budget, the Finance Ministry in Moscow plans to increase the tax from 20 to 22 percent.

The state will fulfill all its social policy obligations, it said in a statement. However, defense and security, as well as the provision of services to soldiers and their families, were cited as "strategic priorities."

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According to estimates, military and security expenditures already account for approximately 40 percent of all government spending in the current 2025 Russian budget. The war economy, with large contracts for the defense industry and high payments to soldiers and their families, brought the country apparent growth for a while. But recently, signs of crisis have been increasing in civilian sectors. The Russian population is suffering from rising prices.

A higher VAT will be noticeable for consumers with every purchase, even if the tax rate for food, medicine, and children's supplies is to remain at 10 percent, according to the Ministry of Finance. Russia has been waging war against neighboring Ukraine for more than three and a half years on the orders of President Vladimir Putin; peace is nowhere in sight.

The draft budget still has to be discussed and approved by the Russian parliament. However, this is considered a mere formality in Russia.

RND/dpa