Russian authorities are preparing citizens for a further deterioration in living standards as the country faces a record budget deficit projected to reach 5.74 trillion rubles in 2025. To offset the shortfall, the Kremlin plans to raise taxes and cut social benefits, while using senators and regional governors as “lightning rods” to absorb public anger.
Official plans include increasing VAT from 20% to 22%, lowering the threshold for simplified taxation, and revising benefits for self-employed citizens, who currently pay only 4–6% in tax. The self-employment regime may be abolished as early as 2026, forcing individuals either to register as entrepreneurs or to pay the full income tax rate.
In parallel, the government is discussing the introduction of social contributions for the unemployed, freelancers, and informal workers. These measures are being promoted under the slogan of “social justice,” but in reality will increase the financial burden on ordinary citizens.
The Kremlin also intends to scale back social programs: “maternity capital” payments would be granted only for the third child, while the “family mortgage” program could be shifted to regional funding. With 68 regions already running budget deficits, local authorities are being forced to raise transport taxes and parking fees—becoming the front line of unpopular decisions.
These changes are a direct consequence of the war: sanctions imposed for Russia’s aggression have sharply reduced state revenues. The Kremlin is effectively rewriting its social contract with citizens—from the previous “you don’t protest, we guarantee stability” to a new formula: “you support the regime — you pay more.”
