Reuters: Russian government wants to raise VAT despite Putin's promises not to

The Russian government is considering raising the value-added tax (VAT) from 20% to 22% to reduce the budget deficit. About writes Reuters, citing informed sources.

The discussions, according to the agency, continue despite the Russian dictator's previous statements Vladimir Putin that there are no plans to raise taxes.

The draft budget for 2026 is expected to be presented to the Russian parliament on September 29. The main parameters of the budget are agreed with Putin in advance and usually do not change significantly during the consideration.

This year, Russia has already raised taxes on personal and corporate income, but in May the government was forced to triple its budget deficit estimate to 1.7% of GDP. The actual deficit is expected to exceed this figure.

According to Reuters, a two percentage point increase in VAT could almost halve the projected deficit in 2026. In 2024, VAT accounted for about 37% of Russian budget revenues.

In addition, Russia's GDP is expected to slow from 4.3% last year to about 1% in 2025. As for inflation, it is projected to remain above 8%. A significant portion of the labor force and about 40% of government revenues are spent on defense and security.

Earlier, Putin called for increasing revenues through productivity growth rather than taxes. However, according to one of the agency's sources, it is impossible to cut military spending, and small cuts in social spending will do little good.

Elvira Nabiullina, the head of the Central Bank of the Russian Federation, supported the possibility of raising VAT, noting that it is better to get additional revenues than to increase the deficit.

• On September 9, it was reported that according to the forecast, the "hole" in Russia's budget will reach $150 billion in the next three years.