Russia’s economy, which experienced robust growth over the past two years driven by military spending on the war in Ukraine, is now showing signs of deceleration. Declining oil revenues, a widening budget deficit, and stabilized defense expenditures have forced the Kremlin to seek new revenue streams. President Vladimir Putin’s administration is turning to ordinary citizens and small businesses to bridge the financial gap. A proposed increase in the value-added tax (VAT) from 20% to 22%, expected to generate up to 1 trillion rubles ($12.3 billion), is already progressing through Russia’s parliament and is set to take effect from January 1, 2025. This move is part of a broader fiscal strategy that includes lowering the VAT collection threshold for businesses and introducing new taxes on alcohol, tobacco, and digital equipment. The economic slowdown, exacerbated by high central bank interest rates and Western sanctions, has pushed the budget deficit to 2.6% of GDP, up from 1.7% last year. Finance Minister Anton Siluanov emphasized that raising revenue through taxes is preferable to increasing borrowing, which could accelerate inflation. While the Kremlin has sufficient funds to sustain its current war efforts for the next 12 to 14 months, experts warn that Putin will soon face tough choices between military spending and consumer welfare.