Russia allocates 38% of the budget to the army and security forces: social spending sharply reduced.

According to ТСН: The new budget law of the Russian Federation, signed by President Vladimir Putin, provides for record spending on the army and arms procurement.

The Kremlin plans to spend 12.93 trillion rubles ($166 billion) on these needs, which accounts for almost 30% of the entire budget — the largest share of expenditures since the Soviet Union.

For the item 'national security', 3.91 trillion rubles is allocated, which finances the Ministry of Internal Affairs, the National Guard, intelligence agencies, and the Federal Penitentiary Service. Thus, 38% of the budget will go to the army and security structures. Compared to 2021, when this share was 24%, it has increased by 1.6 times.

Social Spending and Tax Reform

The share of social spending will decrease to 25.1% (down from 38.1%), and spending to support the national economy will decrease to 10.9% (from 17.6%). Both indicators are the lowest in the past 20 years.

In light of a 20% decline in oil and gas revenues this year, the Kremlin plans to 'squeeze' 2.9 trillion rubles from the non-resource sector of the economy through new taxes. Starting from 2026, the VAT rate will be increased to 22% for the second time in 7 years, and a radical tax reform for small businesses will begin, resulting in many entrepreneurs losing the ability to operate under the simplified tax system.

From September 2026, a 'technology tax' will be introduced, which will effectively be a tax on equipment and electronics sold in Russian stores.

To balance the budget, the authorities intend to cut several key social programs.

Recently, a Russian economist stated in a comment to a propaganda radio station that the Kremlin is concealing the catastrophic state of the economy, which is on the brink of recession — an economic decline associated with a fall in the domestic gross product.

Such changes in the Kremlin's budget policy indicate a prioritization of resource allocation towards security structures amid economic instability. Reductions in social spending and the introduction of new taxes may lead to an exacerbation of socio-economic problems in the country.