Russian officials have proposed a significant increase in the value-added tax (VAT) from 20% to 22% effective next year, according to the Finance Ministry. This move is intended to address a growing budget deficit, which has been exacerbated by rising military spending. The decision reflects the government’s efforts to manage financial pressures while sustaining its defense initiatives.
The Finance Ministry stated that the VAT hike is a necessary measure to ensure the country’s fiscal stability. With military expenses reaching record levels, the government is seeking additional revenue to fund these expenditures. This strategy is expected to have a substantial impact on consumers and businesses, as the increased tax burden could lead to higher inflation and reduced disposable income.
Analysts suggest that the tax increase may have broader economic implications, including potential slowdowns in consumer spending and business investments. The government’s approach underscores its corporatist political stance, balancing state control with market mechanisms to stabilize the economy amidst rising financial demands.