By John Q. Hosedrinker 
The Kremlin has announced that Russian President Vladimir Putin has ordered a “significant increase” in tax collection and compliance, prompted by the slowdown in Russia’s wartime economy. This directive includes a rise in consumption taxes from 20% to 22% and the planned introduction of a new tax on electronics. The government aims to stimulate economic growth and investment while simultaneously managing inflation, targeting a rate between 4% and 5% by the end of 2026. These measures come amid concerns over declining oil prices and potential impacts from the US’s approach to Venezuelan oil, which could further weaken Russia’s economic standing.
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Putin demands more taxes as Russia’s growth slows to a crawl in wartime economy, a situation that’s become increasingly apparent. The harsh reality is that a war economy, while initially masking the true economic state, ultimately eats away at the foundation of long-term prosperity. It’s like trying to build a house on quicksand; any short-term gains are ultimately unsustainable.
The war has exposed the fragility of Russia’s economic model. While there was a fleeting period of high production capacity and rising wages for some, the cracks were quickly papered over by soaring inflation, hitting those outside the war effort the hardest. Both Russia and Ukraine are essentially in an economic freefall, and the question isn’t if, but when the collapse becomes undeniable. It’s a game of diminishing returns, where each “trick” used to prop up the facade becomes less effective.
The current situation begs the question: how much longer can this go on? Putin, with his personal wealth, could seemingly alleviate some of the pressure on his people, but instead, he’s demanding more. This raises the specter of internal dissent, a dangerous prospect for any leader. It’s a path that has historically led to turmoil.
Perhaps a pragmatic solution would be to seek a face-saving exit. If Putin were to secure occupied territories and declare victory, the potential consequences could be less dire than continuing the current course. Western investment could flow back, and the possibility of Ukraine becoming more prosperous than Russia is one the Kremlin would want to avoid. However, Putin’s imperialist ambitions might prevent any such course of action.
One can’t help but wonder if Putin’s actions are driven by something deeper than just economics or geopolitics. His personal wealth, accumulated over decades, provides a striking contrast to the sacrifices he demands from his people.
His priorities seem completely out of whack. While his own lifestyle remains extravagant, he’s effectively trying to squeeze blood from a stone. Taxing a population already reeling from the economic effects of war is not a long-term solution. It’s akin to robbing an empty bank, as the economic engine struggles to produce anything.
Furthermore, it’s not simply a matter of taxes; Russia’s economy has been stagnating for decades. The war has only amplified the underlying problems, exposing the regime’s long-term failure to foster genuine economic growth. The state is demanding more from people while they are suffering and losing their loved ones, a tragic situation.
The military expenditure is staggering, consuming a significant portion of Russia’s GDP, which exacerbates the economic strain. While other countries may spend a fraction of their GDP on defense, Russia’s spending creates disproportionate economic strain. Without the capacity to offset economic weakness, the demand for more will likely come to a head.
The war has also resulted in a significant population decline, further undermining Russia’s economic prospects. Fewer people mean a smaller workforce and reduced economic output. The demographics are poor, and more economic decline should be anticipated.
Ultimately, the situation boils down to a fundamental lack of sustainable economic practices. While Russia’s leadership may appear to be adept at managing a crisis in the short term, the long-term consequences of these actions are unavoidable. One might call it a “masterclass” in crisis management, but it’s a masterclass built on quicksand. The economic and human cost of this conflict will be measured long after the guns fall silent.