Putin's Government Targets Miners and Investors for New Taxes

The Russian state is preparing to raise taxes on specific sectors and individuals to cover rising military costs.

President Vladimir Putin's administration announced a series of new levies following the September parliamentary elections. The measures target mining companies and higher-income citizens. This group includes those with investment income, property sales, and substantial bank accounts.

The 2027-2029 state budget is scheduled for a vote in the parliament on Thursday. The legislative body is widely considered a rubber-stamp institution. These tax hikes represent a narrower approach than the broad value-added tax increases implemented last year.

The Kremlin previously raised cash register taxes and expanded VAT coverage to more small businesses. The new strategy focuses on extracting revenue from a specific segment of the economy. This shift occurs as the state budget deficit grows beyond initial forecasts.

Military spending has outpaced economic performance. The Russian economy faces several headwinds. These include international sanctions, high interest rates for non-military firms, labor shortages, and Ukrainian strikes on oil refineries and export terminals. The strain on state finances has intensified since Russia's invasion of Ukraine.