Death and taxes. Will raising VAT to 22% be enough to maintain Russia’s vast military spending?

December 30, 2025

TL;DR

The Finance Ministry has proposed raising VAT from 20% to 22% starting January 1st.
The increase aims to cover a budget deficit primarily caused by rising military spending.
The proposed VAT hike is estimated to add over 1 trillion rubles to the federal budget annually.
Economists warn that the VAT increase could lead to economic slowdown, inflation, and price rises.
Certain essential goods like food, medicines, and children's goods will retain a lower VAT rate of 10%.
The government views VAT as a reliable revenue source that is less prone to evasion than income or profit taxes.
Despite previous assurances of stable taxes until 2030, the government is considering this increase due to budget pressures.
If the deficit persists, further tax increases or cuts to civilian spending may be considered.

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