On Friday, Russian President Vladimir Putin approved a law raising affluent income taxes to replenish government coffers depleted by the Ukraine war. Domestically, tax hikes were called “systemic reforms”.
Russian President Vladimir Putin approved a $30 billion tax increase package on Friday to raise funding for his Ukraine offensive from workers and enterprises.
Since sending soldiers into Ukraine in February 2022, Moscow’s expenditure has outpaced receipts by tens of billions, enabling the economy avoid a serious recession but causing rare budget deficits.
Russia’s 2023 budget deficit was 3.2 trillion rubles ($36 billion), or 2% of GDP.
Putin signed a series of tax code modifications on Friday that raises high-earning income taxes and corporation taxes to address the fiscal hole.
Russia’s rubber-stamp parliament approved them this week.
“The changes are aimed at building a fair and balanced tax system,” Finance Minister Anton Siluanov stated in May.
He said the increased monies would boost Russia’s “economic well-being” and fund state investment initiatives.
The finance ministry forecasts that the “systemic reforms” tax hikes will raise 2.6 trillion rubles ($29 billion) in 2025.
Russian budgets for a 1.1% shortfall this year, which is low by many standards.
Over two years, Russia has borrowed from state-owned banks and its sovereign wealth fund to finance the deficit.
