The Russian government, naturally with the Kremlin’s approval, has announced an increase in the value-added tax (VAT) from 20% to 22% starting in 2026. In addition, the authorities will significantly lower the income threshold for applying the simplified taxation system—from the current 60 million rubles to 10 million next year. It is worth noting that the threshold was already reduced in 2025 as part of measures to combat the practice of «business splitting,» where large companies are artificially divided to obtain tax benefits.
The authorities do not hide the fact that the increase in the tax burden is linked to the need to finance the ongoing war, as budgetary reserves for these purposes are being depleted. «What is happening around us is war. This is the most acute phase of the war. It is quite fateful. We need to win it,» stated Vladimir Putin’s press secretary Dmitry Peskov. His words were clearly timed to coincide with the publication of the budget parameters.
The official suggested that «the majority of our country’s population is absolutely consolidated around President Putin,» and therefore will accept the tax increase. «Those who support President Putin—are they ready for some additional burden in the current conditions? I have no doubts that they are,» Peskov said. Propaganda is already trying to convince Russians that the increase will not affect «socially significant categories of goods,» such as food and medicines, and therefore there is nothing to fear.
It is obvious that the Kremlin and the government continue to shield the «Putin majority» from the consequences of the war. However, they have their own view of this very loyal-to-the-president «majority”—they see it as predominantly poor and socially vulnerable groups who barely make ends meet and spend their money mainly on food. Therefore, the tax increase does not affect this category of goods, and the Central Bank keeps the key interest rate high to curb inflation. Prices are rising anyway, which understandably worries Russians. Therefore, the authorities, caring about their ratings among the «Putin majority» as they understand it, continue to maintain a high Central Bank key interest rate.
However, the group supporting the war (and thus Putin’s actions) has long looked different. These are not poor Russians, but well-off citizens who have the resources to «endure» the negative consequences of the war. Often, they become its beneficiaries—receiving higher salaries or signing lucrative contracts with state-owned businesses. Poor citizens lack such resources, so the share of war opponents and supporters of peace negotiations is higher in this group. According to Russian Field survey data, 71% of «affluent» Russians believe the country is moving in the right direction, compared to 64% among the low-income. Support for starting negotiations stands at 53% among low-income residents versus 47% among the «affluent.»
Thus, the tax increase and the tightening of preferential conditions for small businesses directly affect the core of war supporters, the affluent segments of the population and entrepreneurs. The authorities are choosing a simple tactic: take money from those who have it. However, this calculation appears risky. The affluent class could indeed tolerate the war as long as it was not touched by and it and no bill for military spending was presented. Now, when the Kremlin is presenting the bill to them directly, there are no guarantees that this unilateral change to the «social contract» will be accepted loyally.
Representatives of small businesses are already calling the new measures a «disaster.» According to estimates by The Bell publication, the tax burden on legal entities and the most affluent individual entrepreneurs could nearly double. In addition, many entrepreneurs who could previously handle their affairs on the simplified system will now have to hire accountants—this is an additional burden as well. «All costs could rise so sharply that it might be easier to shut down or sell the project,» one entrepreneur admitted in a conversation with The Bell. The bill for the war that the authorities are presenting to the loyal business community may prove unaffordable for it. As a result, this group may reconsider its attitude toward the «special military operation.»
The VAT increase on «socially insignificant» goods (household appliances, electronics, cars, services) affects both the affluent segments of the population inclined to support the war and the less well-off citizens. Due to the unavailability of loans, purchasing expensive equipment like refrigerators or washing machines becomes an extremely difficult task for low-income Russians. Thus, the Kremlin is forcing even those who view the war critically to bear the financial burden for it. And this will inevitably affect the outcomes of the 2026 Duma campaign.
Tax on Elections
Paradoxically, the authorities have decided on unpopular measures not after federal elections, as was the case with the pension age increase after the 2018 presidential elections, but on the eve of them. This underscores the full seriousness of the budget problems. Next year, Russia will hold voting for State Duma deputies. The campaign is already shaping up to be a tough one for United Russia: even according to sociological services cooperating with the Kremlin, the party’s rating hovers around 35%.
The political bloc of the Presidential Administration, led by Sergei Kiriyenko, is traditionally focused on achieving record results in elections, and this strategy is unlikely to change. In the previous elections in 2021, United Russia officially received 49% of the votes, and in 2026, the target will apparently be 55−60%. On regional elections with low turnout, achieving these KPIs is usually possible. However, on federal elections, turnout must be high—the political bloc wants to demonstrate strong support for the Putin course.
Despite having powerful tools for compelling participation in elections and voting for the desired candidates, the task of giving a high percentage to a party that will inevitably vote for unpopular measures and explain them through cynical propaganda talking points becomes almost impossible. The 2018 pension reform crashed United Russia’s rating, and it has never recovered. The tax reform will inflict additional damage on the ruling party. And it’s not just about ratings in percentages.
The Kremlin and the government are hitting relatively small businesses, which often form the backbone of administrative support for United Russia at the local level. Such entrepreneurs are frequently elected from the party to municipal councils in small towns or unified «municipal districts» of former rural areas. They are friends with local officials and are ready to help with votes by mobilizing employees who are included in corporate mobilization databases. By creating problems for such entrepreneurs, the Kremlin is creating problems for its own administrative resource. Additional taxes are unlikely to motivate business to support the ruling party, and the closure of small companies will leave their employees on the street and eliminate them from the loyal base.
For systemic parties, which value the Kremlin’s favor far more than their ratings among voters, the tax increase is no less of a test. The LDPR, which the Presidential Administration seeks to bring to second place in the Duma elections, does not criticize the tax hike but merely emphasizes the social orientation of the budget. Representatives of the New People, who position themselves as a party of urban voters and business support, are completely silent. The leadership of A Just Russia, which previously could criticize unpopular government initiatives without touching Vladimir Putin personally, also has no words for comment.
As a result, the Kremlin has unwittingly given an advantage to CPRF, which the authorities themselves seek to displace from second place in the Duma. The Communists are already criticizing the tax increase and will continue to do so. The positions of the ruling party and representatives of «Systemic Opposition» are increasingly diverging from the real sentiments of voters, whose interests currently remain effectively unrepresented.
War Participants Were Not Given a Platform
Following the regional elections, the majority of speakers of regional legislative assemblies and senators representing these bodies in the Federation Council have retained their seats. The few rotations are mainly among established local elites. For example, the speaker of the Voronezh Regional Duma, Vladimir Netesov, is stepping down to become a senator, and his place will be taken by the head of the Buturlinov District administration, Yuri Matuzov. In Komi, the chairman of the State Council, Sergei Usachev, and his first deputy, Alexander Makarenko, will swap places. There are no war participants (even officials or deputies who announced their dispatch to the front) among the speakers. The authorities clearly have no intention of giving formally high posts with fairly limited influence to the military. Order and discipline in the legislative assemblies will be maintained by fully loyal and time-proven people.
A similar situation is observed in the senatorial corps. Alexei Kondratiev, positioned as a war participant, became the representative of the Tambov governor. However, in the 2010s, Kondratiev was the mayor of Tambov, and last year he became a senator from the head of the Kursk region. The Kostroma legislative assembly is delegating the widow of the killed general Igor Kirillov, Svetlana Kirillova, to the Federation Council. However, the Kirillov family is friendly with the region’s governor, Sergei Sitnikov. So, experiments with the military theme in the Federation Council have clearly been put on pause.
