Russia's New Budget: Three-Year Military Spending Stays at Historic Highs, Tax Hikes to Fill War Funding Gap
nashnova research
Russia submitted a new budget bill keeping military spending near a historic peak of ~17 trillion roubles over three years; to close the gap, Moscow is taxing mining, fertilisers, and dividends across the board — locking its finances deeper into wartime mode.
How high is the military tab?
The 2027 defence budget is set at roughly 17 trillion roubles (~$205 billion), 27% above the previous target.
In 2028 the figure dips only slightly to 16.6 trillion roubles. This means → the so-called drawdown is cosmetic; peak-level war spending is locked in for at least three more years.
In plain terms = five years into the Ukraine war, Russia's national ledger is fixed in wartime mode with no visible off-ramp.
Where does the money come from?
The centrepiece is sweeping tax hikes. Mining and fertiliser firms face the heaviest burden: when a commodity's rouble-denominated global average exceeds the 2025 benchmark by ≥10%, the state levies a windfall tax of up to 30% on excess profits.
Gold miners are singled out with a separate 20% windfall tax. This means → Moscow is slicing off a large share of any "surprise upside" from high oil and gold prices.
The mining and metals levies alone are projected to yield roughly 200 billion roubles a year. Additional measures include a new dividend tax, revised profit-tax rules, and proceeds from selling confiscated assets.
How tight is the fiscal gap?
Weakening energy revenues + rigid military outlays are squeezing the budget; this year's deficit is projected at roughly 2% of GDP.
This reflects a structural mismatch: Russia's biggest revenue source (energy) is shrinking while its biggest spending line (defence) is expanding — the scissors gap only widens from here.
In plain terms = the government is plugging the hole by taxing corporates and the wealthy, but if oil stays soft and the war drags on, there is only so much left to tax — whether Moscow can hold this fiscal path without deeper economic distortion is the central test of the next three years.
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