Faced with colossal expenditures on the war in Ukraine and the weakening of its primary income source—oil exports—the Russian government is compelled to find new ways to finance the aggression, turning directly to the pockets of its own population. Moscow's core oil revenues are plummeting due to systematic Ukrainian attacks on refineries and tightening Western secondary sanctions that deter major trading partners, including China, India, and Taiwan. To cover war costs, the government in Moscow has decided to raise the Value Added Tax (VAT) for the second time in seven years, increasing it from 20% to 22% starting in 2026. This fiscal measure, along with others, is intended to cover 1.23 trillion rubles (approximately €13.58 billion), reports The WP Times citing Financial Times.

The impending tax burden, which would place Russia among countries with the highest tax rates, raises concerns among experts regarding social consequences. According to a survey by the analytical firm Gallup, already one-third of polled Russians report they lack sufficient funds to purchase even basic food items and cover daily expenses. To divert public dissatisfaction, the Kremlin has devised a campaign to shift responsibility. The Financial Times reported that a meeting of high-ranking politicians and state media representatives concluded that the blame for Russia's economic turmoil and the necessary tax increase should be placed squarely on the "hostile West," which is allegedly not interested in peace.

Furthermore, the Financial Times indicates that media outlets received a direct instruction to avoid mentioning Vladimir Putin in the context of the unpopular tax hike. Instead, propaganda channels are directed to emphasize positive aspects of the new fiscal package, such as increased taxes on gambling companies. As additional measures against economic collapse and escalating war expenses, AP News reports on the Duma's plans to lower the threshold for tax deductions for companies from 60 million to 10 million rubles, abolish a special discount on the state "recycling fee" for cars, and increase excise taxes on tobacco, alcohol, and e-cigarettes, as well as introduce import duties on electronics, including smartphones and laptops.

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