MOSCOW: Russian President Vladimir Putin on Friday signed a package of increased tax worth almost $30 billion, tapping companies and workers to contribute funds for his military campaign in Ukraine.
Moscow’s spending has caused tens of billions of dollars to country’s revenue since it ordered troops into Ukraine in February 2022. Russia’s budget deficit stands around 3.2 trillion rubles ($36 billion) in 2023, equivalent to two percent of GDP.
Putin on Friday signed into law a set of amendments to Russia’s tax law that includes hike on income taxes for high earners and corporate taxes paid by businesses in an attempt to help plug the fiscal hole.
These laws were earlier passed by Russia’s parliament earlier this week. “The changes are aimed at building a fair and balanced tax system,” Finance Minister Anton Siluanov said.
He added the extra funds would enhance Russia’s “economic well-being” and go towards a series of public investment schemes.
According to the finance ministry estimates the tax increases which are being presented domestically as systemic reforms will raise around 2.6 trillion rubles ($29 billion) in 2025.
Russia registered a 1.1-percent of budget shortfall this year modest compared to many countries in the world.
As Russia is blocked from Western financial markets and around $300 billion of its foreign currency reserves frozen by sanctions, Moscow’s public finances are a major indicator of how long and how aggressively the Kremlin can finance its military campaign on Ukraine.
Putin in May said spending on defence and security has increased to more than eight percent of Russia’s GDP. Moscow also gives huge salaries and benefits to those soldiers who are fighting against Ukraine.
