Russia Proposes VAT Hike to Fund Military in Ukraine Conflict
Russia's finance ministry proposes raising VAT from 20% to 22% by 2026 to fund military spending amidst ongoing war in Ukraine. The increase aims to boost defense and security funding, potentially generating additional $11.9 billion in revenue. The U.S. criticizes Russia's economic strategy as tensions continue.
On Wednesday, Russia's finance ministry proposed a significant increase in the value-added tax (VAT), suggesting a rise from 20% to 22% in 2026. This move aims to fund military spending, marking what would be the fifth year of Russia's involvement in the war in Ukraine.
In a press statement, the finance ministry indicated that the additional revenue generated by this proposal, estimated at approximately 1 trillion roubles ($11.9 billion), would primarily support defense and security needs. Such measures reflect the escalating economic pressures faced by Russia amidst its prolonged military operations.
U.S. President Donald Trump sharply critiqued Russia's ongoing economic strategies, labeling the nation as a "paper tiger" with dwindling economic strength. Despite Trump's comments, Russia remains firm, with Kremlin spokesman Dmitry Peskov asserting that the Russian economy has adapted to the current challenges posed by the military conflict.
(With inputs from agencies.)
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