Close Menu
Finance Pro
  • Home
  • Art Gallery
  • Art Investment
  • Art Stocks
  • Cryptocurrency
  • Finance
  • Investing in Art
  • Investments
Facebook X (Twitter) Instagram
Trending
  • Brussels Parliament to confirm outgoing Finance Minister’s replacement on Thursday
  • Deloitte study: most EU financial institutions are in early preparation stage to comply with the new anti-money laundering and countering financing of terrorism requirements and need significant investments to align to the new European framework
  • Barclays near-quadruples provisions for motor finance scandal
  • Talk Art podcast hosts Russell Tovey and Robert Diament to celebrate the release of new book, Art School (in a Book), at Margate’s Turner Contemporary
  • Internationally acclaimed artist to open new art gallery in Exmouth
  • Bank should take concerns over private finance ‘very seriously’, says Bailey – The Independent
  • Madison Investments Q3 2025 Market And Economic Review
  • Bank of England warns First Brands and Tricolor collapses may signal deeper financial risks – Yahoo
  • Privacy Policy
  • Terms and Conditions
  • Get In Touch
Finance ProFinance Pro
  • Home
  • Art Gallery
  • Art Investment
  • Art Stocks
  • Cryptocurrency
  • Finance
  • Investing in Art
  • Investments
Finance Pro
Home»Finance»Russian finance ministry proposes raising VAT to help fund Ukraine war
Finance

Russian finance ministry proposes raising VAT to help fund Ukraine war

September 23, 20254 Mins Read


By Darya Korsunskaya and Gleb Bryanski

MOSCOW (Reuters) -Russia’s finance ministry proposed raising the rate of value-added tax on Wednesday to 22% from 20% in 2026 to fund military spending and help curb a swelling budget deficit, in what would be the fifth year of the war in Ukraine.

The proposal comes as U.S. President Donald Trump called Russia a “paper tiger” for “fighting aimlessly for three-and-a-half years” and said that Russia was in “big economic trouble”.

President Vladimir Putin signalled last week that he was open to raising certain taxes during the war, noting that the U.S. had raised taxes on wealthy people during the Vietnam and Korean wars.

The government on Wednesday approved a new draft budget for 2026, called by some Kremlin officials a “wartime budget”, and announced updated figures for 2025, with economic growth expected to plummet to 1% from 4.3% last year.

National defence spending will fall to 12.6 trillion roubles ($150.5 billion) in 2026 from a post-Soviet high of 13.5 trillion in 2025, finance ministry documents showed.

In 2025, the deficit is seen at 2.6% of national output, the highest since the start of the war, according to the documents reviewed by Reuters, exceeding the previous target by 53%.

TAX HIKE PRIMARILY TO FUND ‘DEFENCE AND SECURITY’

The proposal is in line with a Reuters report last week. VAT, a consumption tax seen as easy to administer, accounted for 37% of budget revenues in 2024. Alexander Shokhin, head of a major business lobby, called the hike “unpleasant”.

The ministry estimated that the increase would generate about 1.2 trillion roubles ($14.33 billion) in additional revenue in 2026. The government also plans to increase borrowing by 46% in 2025.

The finance ministry said the tax hikes would be “aimed primarily at financing defence and security”. It proposed other tax increases, including on gambling businesses, and the elimination of tax breaks on small businesses.

The proposal will spur inflation, which has been receding in recent months, and make more key rate cuts more difficult for the central bank, which said it will take into account the effects of the VAT increase on inflation expectations.

A two percentage point 2019 VAT hike contributed 0.6 percentage points to inflation that year, according to the central bank, which has pledged to halve it from current levels and return it to its 4% target in 2026.

T-Bank analyst Sofya Donets estimated that in 2026 the tax hike would boost inflation by 1.5 percentage points, making the central bank’s job more difficult as it navigates between worsening inflation and a further economic slowdown.

The rouble was little changed at 83.75 to the U.S. dollar on Wednesday, with analysts saying that a slower pace of key rate cuts supported the Russian currency. The average rouble rate is seen at 92.2 to the dollar in 2026 in the new forecast, about 8% stronger than in the previous one.

After meeting Ukrainian President Volodymyr Zelenskiy on the sidelines of the U.N. General Assembly in New York, Trump posted on his Truth Social platform: “Putin and Russia are in BIG Economic trouble, and this is the time for Ukraine to act.”

Trump’s tone was in stark contrast to his red-carpet treatment for Putin at a summit in Alaska last month, part of an ostensible push to expedite an end to the war.

‘NO SUCH THING AS A PAPER BEAR’

Kremlin spokesman Dmitry Peskov told RBC radio on Wednesday the Russian economy had adapted to the conflict in Ukraine.

Brushing off Trump’s “paper tiger” comment, Peskov said Russia was a bear, not a tiger, and “there is no such thing as a paper bear”, while adding Putin valued Trump’s efforts to resolve the conflict.

The finance ministry said the draft 2026 budget was “balanced and sustainable” while providing “financial support for the country’s defence and security needs”.

“The resources planned in the budget will make it possible to equip the armed forces with the necessary weapons and military equipment, pay salaries to military personnel and support their families, and modernise defence industry enterprises,” it said in a statement.($1 = 83.7500 roubles)

($1 = 83.7455 roubles)

(Editing by Andrew Osborn, Alex Richardson, Sharon Singleton and Gareth Jones)



Source link

Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

Related Posts

Brussels Parliament to confirm outgoing Finance Minister’s replacement on Thursday

October 22, 2025 Finance

Barclays near-quadruples provisions for motor finance scandal

October 21, 2025 Finance

Bank should take concerns over private finance ‘very seriously’, says Bailey – The Independent

October 21, 2025 Finance

Bank of England warns First Brands and Tricolor collapses may signal deeper financial risks – Yahoo

October 21, 2025 Finance

Sarkozy enters jail over campaign financing

October 21, 2025 Finance

Former French President Nicolas Sarkozy starts five-year prison sentence for campaign finance conspiracy

October 21, 2025 Finance
Add A Comment
Leave A Reply Cancel Reply

Don't Miss

Brussels Parliament to confirm outgoing Finance Minister’s replacement on Thursday

October 22, 2025 Finance 1 Min Read

On Thursday afternoon the Brussels’ regional parliament’s Extended Bureau will meet to elect and swear…

Deloitte study: most EU financial institutions are in early preparation stage to comply with the new anti-money laundering and countering financing of terrorism requirements and need significant investments to align to the new European framework

October 22, 2025

Barclays near-quadruples provisions for motor finance scandal

October 21, 2025

Talk Art podcast hosts Russell Tovey and Robert Diament to celebrate the release of new book, Art School (in a Book), at Margate’s Turner Contemporary

October 21, 2025
Our Picks

Brussels Parliament to confirm outgoing Finance Minister’s replacement on Thursday

October 22, 2025

Deloitte study: most EU financial institutions are in early preparation stage to comply with the new anti-money laundering and countering financing of terrorism requirements and need significant investments to align to the new European framework

October 22, 2025

Barclays near-quadruples provisions for motor finance scandal

October 21, 2025

Talk Art podcast hosts Russell Tovey and Robert Diament to celebrate the release of new book, Art School (in a Book), at Margate’s Turner Contemporary

October 21, 2025
Our Picks

Museum of Contemporary Art Denver names new director – The Art Newspaper

October 21, 2025

Sarkozy enters jail over campaign financing

October 21, 2025

6 Ways To Identify the Right Investments Early, According to Experts

October 21, 2025
Latest updates

Brussels Parliament to confirm outgoing Finance Minister’s replacement on Thursday

October 22, 2025

Deloitte study: most EU financial institutions are in early preparation stage to comply with the new anti-money laundering and countering financing of terrorism requirements and need significant investments to align to the new European framework

October 22, 2025

Barclays near-quadruples provisions for motor finance scandal

October 21, 2025
Weekly Updates

From D.C. to the Venice Biennale: Liz Collins Finds New Recognition

April 27, 2024

Donald Trump’s World Liberty Financial Token Sales Hit $220M In First Hour, Website Faces Multiple Outages

October 16, 2024

How much is Lando Norris worth? Net worth, career earnings and investments explained

August 27, 2025
  • Privacy Policy
  • Terms and Conditions
  • Get In Touch
© 2025 Finance Pro

Type above and press Enter to search. Press Esc to cancel.