Russia’s ongoing war in Ukraine has taken a significant toll on the country’s economy. To offset the financial strain and fuel its war effort, the Russian government has taken a drastic step: approving sweeping tax hikes.
On Wednesday, the lower house of parliament, the State Duma, gave its final approval to the finance ministry’s proposed tax increases. The changes are expected to raise an additional $30 billion in revenue for the Russian government next year, enabling Moscow to escalate spending on the war without compromising fiscal stability.
The tax hikes target both individuals and businesses. For businesses, corporation tax is set to increase from 20% to 25%, and new mineral extraction taxes will be implemented. Individuals will also see an impact, with progressive income tax rates being raised, likely affecting higher earners.
The bill is expected to pass through the upper chamber, the Federation Council, and receive President Putin’s signature with little resistance, making it a near certainty for implementation. The passage of these tax increases highlights Russia’s determination to continue its war in Ukraine despite international sanctions.
While the tax hikes may help stabilize the budget, they could also have negative consequences for the Russian economy. Increased tax burdens might discourage investment and slow economic growth. Additionally, the move could potentially lead to discontent among those affected by the tax increases, creating social and political unrest.