State Duma Passes Record Defense Spending Budget in First Reading

Oct. 29, 2026 REUTERS / Ramil Sitdikov Lawmakers in the lower house State Duma passed the first reading of a draft three-year federal budget on Thursday, approving record defense spending alongside a new wave of tax hikes designed to fund the rising costs of the war in Ukraine. The proposed budget allocates 17.1 trillion rubles ($202.6 billion) to national defense, accounting for over a third of total federal expenditures. Combined with a 7.6% increase in national security and policing, security forces will account for 44% of total government spending, totaling 21.3 trillion rubles ($262.1 billion). “All questions related to security, defense and providing everything necessary for participants of the special military operation and their families have been resolved,” State Duma Speaker Vyacheslav Volodin said during a discussion of the bill. To offset soaring military expenditures, the draft budget redirects funding away from civilian sectors. Spending on economic support and healthcare will each drop by 3%, while funding for social support falls by 6% and housing and utilities take an 8% cut. Russia is relying on broad revenue extraction measures to cover its spending priorities. The draft proposal imposes a 22% value-added tax (VAT) on cross-border online retail, alongside a small customs fee on small international packages. It also introduces a progressive tax scale reaching up to 22% on passive personal income, a 35% levy on dividend transfers to non-resident Type C accounts and a 30% tax on excess corporate profits in the mining and metallurgy sectors. Finance Minister Anton Siluanov said the budget draft preserves the key priorities of “fulfilling social obligations to our citizens, addressing the tasks of the special military operation, ensuring victory… and achieving the president’s national development goals.” The draft bill passed with 372 votes in favor, 51 abstentions, and zero opposing votes. It now advances to its second reading before going to the upper-house Federation Council for a vote, after which it will require a final signature from President Vladimir Putin. Read more about: Budget , State Duma Sign up for our free weekly newsletter Our weekly newsletter contains a hand-picked selection of news, features, analysis and more from The Moscow Times. You will receive it in your mailbox every Friday. Never miss the latest news from Russia. Preview Subscribers agree to the Privacy Policy We sent a confirmation to your email. Please confirm your subscription. A Message from The Moscow Times: Dear readers, We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent." These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia. We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help. Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact. By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us. Once Monthly Annual Continue Not ready to support today? Remind me later. × Remind me next month Remind me Thank you! Your reminder is set. We will send you one reminder email a month from now. For details on the personal data we collect and how it is used, please see our Privacy Policy. Read more Vocal Pro-War Lawmaker Expelled From State Duma’s Defense Committee State Duma deputy Andrei Gurulev reportedly defied the Kremlin’s requests to “temper” his frequent state TV appearances. 1 Min read Russian Lawmakers Pass Bill Paving Way for Taliban’s Removal From Terrorist List The legislation outlines a legal mechanism for groups to be removed from the Russia’s official list of outlawed “terrorist” groups. 2 Min read Russia to Introduce Language Exams for Migrant Children to Enroll In School The latest ban comes amid renewed anti-migrant sentiment and a raft of new legislation targeting migrants in the country. 1 Min read opinion Alexandra Prokopenko The Race to Grab Russia’s Reserves The National Wealth Fund is the last chance for state capitalists to get paid for practically nothing.