Russia prepares for a new tax increase to finance the war – media

Economists are predicting that Russia will be forced to raise taxes again because of rising military spending amid the war in Ukraine. Russian authorities have already planned a tax reform, but it is unlikely to fully cover rising defense spending. This was reported by Reuters on Thursday, October 31.

So, in the draft budget of the Russian Federation for 2025, they plan to allocate a third of all expenditures, or 6.3% of GDP, to defense – the highest level since the Cold War.

For the first time, the share of defense spending will be twice that of social spending.

Analysts warn that the announced tax changes, which are expected to generate 1.7% of GDP in additional revenue by 2025, will not be enough to cover the costs.

Due to Western sanctions, Russia has lost access to international funding markets, increasing pressure on the budget.

The situation is complicated by falling oil prices, which are expected to reduce export earnings.

Let’s remember that in 2024, Russian companies are facing big financial problems due to sanctions, that’s why they don’t have money to pay taxes to the budget.

Earlier it was reported that in the regions of the Russian Federation the economic slowdown was the biggest in two years.

And despite the fact that the collapse of the oil and gas economy is predicted in the Russian Federation, the war against Ukraine is currently keeping the Russian economy afloat.

At the same time, the Russian Federation continues to increase the share of secret expenditures in the budget, which will reach another record next year.