Russia has released a draft budget for 2026 that claims a slight decrease in defense spending, a projection met with widespread skepticism as the Kremlin prepares for a fifth year of its full-scale war in Ukraine. While the official figures suggest a minor cut, the budget’s heavy reliance on classified expenditures and a simultaneous plan to raise taxes on ordinary citizens paint a different picture of a state mobilizing its entire economy for a protracted conflict.
According to the proposal from the Ministry of Finance, Moscow plans to allocate 13 trillion roubles (approximately $134 billion) specifically for “national defense” in 2026. This represents a nominal decrease from the 13.5 trillion roubles ($139 billion) earmarked for the current year. However, analysts are treating the figure with extreme caution. A significant portion of Russia’s military budget is classified, making it impossible to independently verify the numbers or track how the funds are truly being spent.
More revealing is the figure for total security-related spending. When combining the defense budget with allocations for police, national guard, intelligence services, and other security structures, the total comes to a staggering 17 trillion roubles ($175 billion). This amounts to roughly 38% of Russia’s entire federal budget, underscoring the Kremlin’s overwhelming prioritization of the war and internal security over all other domestic needs like healthcare and education.
To finance this colossal expenditure, the Russian government is turning to its own population. The budget proposal includes a plan to raise the Value Added Tax (VAT) from its current 20% to 22%. The VAT is a broad-based consumption tax applied to most goods and services, meaning the increase will directly impact the cost of living for ordinary Russians, making everyday items more expensive at the checkout.
Economists view the claimed defense cut as a piece of fiscal misdirection. The immense costs of producing missiles, tanks, and ammunition, as well as paying soldiers and covering battlefield losses, make a genuine reduction in military spending highly improbable while the war rages on. The slight nominal decrease is likely a statistical maneuver or is being offset by funds reallocated through opaque, classified sections of the budget.
The combination of a massive, sustained security budget and a regressive tax hike to pay for it reveals the Kremlin’s true strategy: demanding significant financial sacrifice from its citizens to fuel a long-term war effort, all while presenting a facade of fiscal prudence.
