Russia Proposes VAT Hike to Fund Military Amid Ongoing Conflict

The Russian finance ministry proposes increasing VAT from 20% to 22% by 2026 to fund military expenses amid war in Ukraine. This move aims to support defense needs and families of military personnel. President Putin hints at more tax rises, similar to US wartime measures.

The Russian finance ministry announced plans on Wednesday to increase the value-added tax (VAT) from 20% to 22% starting in 2026 to finance military expenditures as the conflict in Ukraine extends into its fourth year.

President Vladimir Putin recently suggested that tax hikes could be a viable solution to financial pressures during wartime, drawing parallels with the United States' tax increases on wealthy citizens during the Vietnam and Korean wars. The ministry described the proposed tax increases as essential for funding 'defense and security' needs, as well as other areas such as gambling.

'Our strategic priority is to secure financing for the country's defense and security, and provide social support to families involved in the special military operation,' a ministry statement said. The proposed budget for 2026 is described as 'balanced and sustainable'.

(With inputs from agencies.)