Anton Gerashchenko
@Gerashchenko_en
Immediately following the “election,” Putin started applying harsher policies. He no longer hides the fact that he does not care about the Russian people, while Russians are increasingly expressing quiet dissatisfaction - although this still has not turned into protests.
This marks a new phase of Russia’s wartime economy.
Immediately after its sham State Duma elections, the Kremlin announced new taxes and fees. The Finance Ministry proposed imposing a 22% VAT on goods Russians buy from foreign online stores, as well as a 100-ruble fee even on parcels worth less than €200. An additional tax is planned for some extractive companies, while the Federation Council proposed nearly tripling taxes for some self-employed workers. The Finance Ministry has also returned to the idea of taxing transactions made through the Faster Payments System. At the same time, the Central Bank is preparing tighter controls over the origins of cash, while the authorities are tightening restrictions on taking rubles and gold out of the country. On top of that come new terms for family mortgages, higher utility tariffs, expensive loans and high gasoline prices. In 2027–2029, the Finance Ministry plans to collect an additional 500 billion rubles annually through what it calls the “whitening of the economy.”
This means that Russia’s wartime economy is entering a new phase. In the first years of the full-scale war, the Kremlin sharply increased military spending without most of the population directly feeling its full cost. This was made possible by high oil and gas revenues, accumulated reserves, and government borrowing. Huge amounts of budget money flowed into the military-industrial complex, the armed forces and related industries. Wages in many sectors were rising, while unemployment remained very low. For some Russians, the war even became a source of additional income.
But now Russia's economic growth has slowed down sharply, the budget deficit has increased, and oil and gas revenues are under pressure. At the same time, military spending remains a priority that the Kremlin has no intention of cutting. So the money must come from elsewhere. Former First Deputy Chairman of the Central Bank Oleg Vyugin said back in the spring that much of the resources that had allowed the government to finance the sharp increase in state spending in 2023–2025 had already been used up. He predicted another tax increase during preparations for the 2027 budget. That is exactly what is happening now.
But the more taxes and controls increase, the stronger the incentive for businesses and households to move into cash, conceal part of their income, cut spending and postpone investments. Russian businesses are beginning to ask, “Who will be next?” and which taxes will be raised next.
Another problem is the regions. Natalia Zubarevich points out that the situation there is increasingly different from the relatively favorable overall picture. In some industrial regions, budget revenues are already failing to keep pace with inflation, deficits are growing, and federal transfers are being cut. In response, regional authorities are beginning to save money on infrastructure and social programs - things people see in their everyday lives.
There is another contradiction. Huge military spending continues to inject money into the economy and support demand, but producing more is becoming increasingly difficult because of labor shortages, sanctions, and other restrictions. This pushes prices higher. The Central Bank is forced to fight inflation with high interest rates. But high rates make loans, mortgages and investment more expensive. The result is a paradox: the state is stimulating the economy with military spending with one hand, while the Central Bank is forced to slow it down with the other. Once again, the main burden falls on the civilian part of the economy.
The Russian population is starting to feel the impact of the war and raise concerns about the rising cost of living. For now, this does not mean mass protests. Russians can be dissatisfied with prices, taxes, or the economic situation while remaining politically passive or continuing to support the authorities. Sociological data show exactly that. But what matters is that dissatisfaction is gradually spreading across more and more areas of life and is appearing even among groups that have traditionally been pillars of support for the authorities.
No, Russia has not yet exhausted its resources for the war. But cheap ways of adapting are gradually running out. Every additional trillion needed to continue the war comes at a higher cost to the economy and society.
If the main question before was whether the Kremlin had enough money to continue the war, the question is now gradually changing: how much more of the cost of the war can be shifted onto businesses and the population without creating serious economic and social problems?
That is precisely what this new phase of Russia’s wartime economy looks like.
4:09 AM · Sep 26, 2026 · 36.2K Views
https://x.com/Gerashchenko_en/status/2103773892711940544
