Putin’s War Will Soon Reach Russians’ Tax Bills

The proposed tax increase underscores Mr. Putin’s rising confidence about his political control over the Russian elite and his country’s economic resilience at home, showing that he is willing to risk alienating parts of society to fund the war. It would represent the first major tax overhaul in over a decade.

“I think that this is a real sign of how comfortable he is,” said Richard Connolly, an expert on the Russian economy at Oxford Analytica, a strategic analysis firm. “The fact that they are doing it — they are looking to repair the house whilst the weather is good, or at least reinforce the walls from a fiscal point of view.”

Military spending and high oil prices have buoyed the Russian economy and driven up wages, despite causing higher inflation and shortages in the labor market; that is probably leading financial officials to see the current moment as a good time to push through tax increases.

Those responsible for paying Russia’s bills cannot predict how much Mr. Putin’s future geopolitical moves will cost or whether Western sanctions will further limit income.

“From Moscow’s point of view, they are looking in pretty good shape, and now is a good time to do these things,” Mr. Connolly said. “Even the people who it will fall on have had a good couple of years and look like they are going to have a good year ahead.”

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Many businesses in Russia are happy to pay higher corporate tax rates so long as the surprise windfall taxes and payments end, but that isn’t guaranteed.

“You increase the corporation tax now, then say you will try your best to refuse windfall taxes, but then if the war carries on, these things are likely to continue,” said Mr. Connolly, who predicted that higher Russian expenditures on defense would persist for a long time.

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