Tax reform, increase in taxes on high incomes: Russia is trying by all means to fill the budgetary hole, dug by the financing of the war in Ukraine. Since 2022, the Russian government has been faced with exploding costs and colossal human losses. According to President Vladimir Putin, in 2024, the national military budget will explode by almost 70% compared to 2023, representing 8.7% of GDP with security investments. A first in modern Russian history.
If until now Russian soldiers injured in combat each received a one-off compensation of 3 million rubles (around 28,300 euros), a government decision introduced new restrictions. Since Wednesday, November 13, a Kremlin decree, signed by the Russian president, reduces compensation paid to injured soldiers.
Between 28,000 and 950 euros
From now on, soldiers will only receive full compensation, i.e. around 28,300 euros, if they suffer from a mutilation falling under “section I”. By definition, this category includes injuries that endanger or cause irreversible damage to organs, such as brain, spine or spinal cord damage. Rib or limb fractures are also part of “Section I”.
Injuries of lesser importance belong to “section II”, which gives the right to payment of compensation estimated between one million rubles (approximately 9,500 euros) and 100,000 rubles (approximately 950 euros). depending on severity. Thus, soldiers with temporary injuries such as minor fractures, concussions, non-organ gunshot wounds or burns to the eyes can benefit from it. Soldiers declared “unfit for service” will also be entitled to an additional 2.96 million rubles (around 28,000 euros). On the other hand, one aid has not been reduced: that paid to the families of soldiers who died in combat. Since 2022, legislation has allowed relatives of soldiers killed during the war to obtain compensation of 7.4 million rubles, or 70,000 euros.
6% of the country’s total budget
If such restrictions have been put in place, it is because Russian coffers are becoming empty as the troops advance in Ukraine. American researchers Thomas Lattanzio and Harry Stevens estimated in an article published on the War on the Rocks websitethat the cost of the war amounted to 2,300 billion rubles (nearly 22 billion euros) in May 2024, or around 6% of the country’s total budget.
According to the press release on the draft budget law for 2025 from the Russian Ministry of Finance, federal spending is expected to increase next year, reaching 41.5 trillion rubles (or 400 billion euros). An increase of almost 12% over one year. “The main priorities of the budget […] are the fulfillment of all social obligations towards citizens, the guarantee of Defense and security of the country, and the guarantee of technological sovereignty,” the ministry wrote. Among other things, “significant funds” will be allocated ” to equip the armed forces with the necessary weapons and military equipment, payment of compensation and support for companies in the military-industrial complex. To make these promises achievable, the government plans to increase taxes on high incomes and companies on January 1st. what to continue to finance the offensive in Ukraine and related expenses.