In January, Russia shifted its personal income tax (PIT) structure from a two-bracket system to a five-tier scale. Economists at Moscow’s Higher School of Economics (HSE) recently estimated that the shift alone cut the growth of real disposable incomes by 0.4% in 2025. Combined with a hike in consumption charges, the increase in taxation is expected to curtail household spending and, in turn, exert downward pressure on overall GDP, warn the authors of the HSE report.
Businesses are also paying more: profit tax jumped from 20% to 25%, mineral extraction levies rose for metals and fertilizer producers, and small firms on simplified tax regimes now have to pay VAT. Altogether, the Finance Ministry projects the state will bring in an extra 2.6 trillion rubles this year, including 1.6 trillion ($20.0 billion) from profit tax and 533 billion ($6.7 billion) from personal income tax, and 17 trillion ($212.5 billion) over five years.
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Despite revenue growth from some sources, other tax inflows are falling. With global oil prices low, mineral extraction tax receipts dropped 18% compared with a relatively strong 2024. Overall, revenues are only at the levels of 2023 — which are comparable to those of prewar 2021. Combined with rising government spending and early prepayments for state contracts, the deficit has exceeded initial targets, reaching 3.7 trillion rubles ($46.2 billion), or 1.7% of GDP — far above the 1 trillion rubles ($12.5 billion), or 0.5% of GDP, written into the original budget law. Amendments had to be passed, but the revised ceiling has almost already been reached.
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Higher state duties on filing court cases were designed to meet two goals at once: raising revenue and reducing pressure on the judicial system. On average, [state] fees are rising by a factor of between ten and fifteen, and in some cases more than fiftyfold. The amendments have already been passed: for example, filing a property claim will now cost 4,000 rubles ($50) instead of 400 ($5). Filing an appeal now costs 3,000 rubles ($37), up from 150 ($2). For economic disputes, the fee rises from 300 ($4) to 10,000 rubles ($125) for individuals and from 2,000 ($25) to 60,000 rubles ($750) for legal entities.
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Long before full-scale invasion, few Russian social security offices were closed or merged and retirement age was increased. That’s while country wasn’t under harsh sanctions and kept making humongous profits on its extraction economy.
There isn’t any secret to how it’s so bad - it’s simply overwhelming corruption, and they’ll keep increasing pressure on their own citizens because asking oligarchs to share their assets would be bit too much.
There isn’t any secret to how it’s so bad - it’s simply overwhelming corruption, and they’ll keep increasing pressure on their own citizens because asking oligarchs to share their assets would be bit too much.
Well that sure sounds familiar.
I wonder if Russia’s propaganda against Ukraine and continued war effort is the symptom of the same problem we have in the US, the fact that fascism always needs an ‘other’ to distract people from the world around them.
What’s there to wonder? This is exactly what it is.
This is the cost of not punting Putin.
Putin: ho-ho-ho! More money to the budget + more recruits willing to fight for money. Double win! Win-win! Check-mate in one move!
If they were on the front, getting blown up, they wouldn’t have to pay taxes. I think. And their mom would get a blender.
For budget reasons, the blender has been replaced by a steak knife.
