Russia raises taxes to fund its war in Ukraine

Every Russian household may soon see a tighter wallet as the government rolls out fresh tax hikes aimed at covering the war’s growing costs, a surprise given the country’s already strained fiscal space. Higher personal and corporate levies could curb disposable income and profit margins, while the central bank’s move to loosen corporate‑loan regulation signals an attempt to offset financing pressures for defence projects. The pressure stems from a widening war‑related deficit; the finance ministry disclosed a draft 2027 budget that relies on additional taxes to bridge the gap left by military spending, with the projected deficit at 2.2 % of GDP and a planned series of hikes through 2029.

Evidence appears in multiple reports: Reuters and the Financial Times note the planned tax increases for 2027‑29, while the Moscow Times details the draft’s specifics. The finance minister quantified the deficit at 2.2 % of GDP, and the central bank signaled looser corporate‑loan rules to fund anti‑drone defences, according to TradingView. The combined fiscal strategy reflects a reliance on taxation rather than borrowing, yet analysts note that long‑term sustainability will hinge on the war’s trajectory and domestic economic resilience.

How sustainable these fiscal measures will be remains unanswered.