Russia hikes VAT as defence spending surpasses health, education and welfare

Russia has proposed a draft federal budget for 2026, prioritising defence and security funding amidst the ongoing war in Ukraine. The budget includes a controversial increase in Value Added Tax (VAT) from 20% to 22%, although essential goods like food and medicines will remain taxed at 10%. This increase comes despite earlier government assurances against raising taxes. Critics argue that the rising cost of living, driven by inflation and stagnant wages, is already placing a heavy burden on ordinary Russians. Government forecasts predict an economic slowdown, with GDP growth expected to reach just 1.3% in 2026, and a continued budget deficit. While officials claim the new measures are critical to fulfilling defence obligations and social commitments, some independent analysts suggest the economy remains resilient, buoyed by redirected energy exports to Asia. However, public discontent is growing, as citizens voice concerns over declining living standards. Al Jazeera’s Yulia Shapovalova reports from Moscow, Russia. Subscribe to our channel: http://bit.ly/AJSubscribe Follow us on X: https://twitter.com/AJEnglish Find us on Facebook: https://www.facebook.com/aljazeera Check our website: http://www.aljazeera.com/ Check out our Instagram page: https://www.instagram.com/aljazeeraenglish/ Download AJE Mobile App: https://aje.io/AJEMobile #RussiaBudget #RussiaVATIncrease #RussiaDefenceSpending #RussianEconomy #RussiaCostOfLiving #RussiaTaxes #VladimirPutin #RussiaSanctions #UkraineWar #AlJazeeraEnglish