Russia needs to raise taxes to sustain war against Ukraine

Reuters reported the information.

The measures already announced to increase revenues will not be enough to finance the country's sharply rising military spending.

“Russia's draft 2025 budget allocates about one-third of total expenditure, or 6.3% of GDP, to the military - the highest level since the Cold War. For the first time, the share of spending on defense will be double that of social spending,” the article says.

According to the outlet, the huge increase in military spending is causing an inflationary spiral in the Russian economy. Interest rates have risen to their highest level since 2003, and the ruble has fallen to a one-year low against the dollar.

“A major tax reform is expected to generate additional revenues worth 1.7% of GDP in 2025. Economists argue this will not be enough,” Reuters writes.

• A report by the American Institute for the Study of War said that when the Russian economy reaches "overheating" due to the Kremlin's spending on new military personnel to replenish losses in the Russian army, Vladimir Putin will be forced to change the way he wages war against Ukraine.