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The Kremlin has decided to publicly blame the west for a forthcoming tax rise to spare Vladimir Putin from criticism that his war economy is starting to hurt ordinary Russians.
The Russian president’s top officials, including domestic policy chief Sergei Kirienko, participated in at least one of the meetings on how to divert blame for the economic hardship.
The meetings took place in the run-up to Russia’s new budget law, which was introduced in late September and passed its third reading on Thursday, said two people familiar with the discussions.
The budget will raise the rate of value added tax in Russia from 20 per cent to 22 per cent from January, going against Putin’s pledge not to raise taxes again before 2030.
One of the meetings on how to handle public reaction to the VAT rise was attended by members of the state-controlled media who were issued with a set of guidelines, seen by the Financial Times.
These prescribe that the media should place responsibility for the tax rise on the west, arguing it is “not interested in a peaceful settlement” of the Ukraine war.
“Your money or your life?” is among the phrases the guidelines recommend using, along with “nothing matters more than security”.
The guidelines also required that any personal mention of Putin in relation to VAT news be avoided, while “positive” aspects of other tax changes introduced in the budget law — such as higher rates for gambling companies — should be emphasised.
Meetings with loyal media outlets at the Kremlin are not unusual, nor are guidelines on how to handle sensitive topics, said editors who have attended such sessions over the years. But in this case, one of them noted, the meeting was only part of a wider series of discussions — a sign of the authorities’ heightened concern.
“They are really concerned about not stirring things up and amplifying the positive,” the person added. The Kremlin did not immediately respond to a request for comment.
Resorting to fiscal decisions so unpopular that they required a separate propaganda campaign to head off dissent suggests the Kremlin’s economic room for manoeuvre is shrinking.
That marks a stark contrast with the early years of the war when record revenues from oil and gas and strong economic growth allowed Russia to fund its military campaign in Ukraine without visible sacrifices at home.
Russia’s budget for the next three years is nominally balanced, with revenues projected to grow slightly faster than spending. However, actual expenditure in recent years has almost always exceeded planned levels, resulting in a larger than expected deficit.
“Even with the planned tax increases, next year’s budget plan does not seem realistic,” said Janis Kluge, an expert on Russia’s economy with the German Institute for International and Security Affairs. “It anticipates a significant reduction in war spending, but if the war continues, this is simply not feasible.”
Lower oil prices and tighter sanctions on Russian crude have driven a drop in energy revenues, forcing Moscow to rely more on other income.
The VAT rise — the second direct tax increase since the full-scale invasion of Ukraine in 2022 — is just one of the measures Moscow has brought in to squeeze funds out of its slowing economy.
Others include cutting tax benefits for small businesses, raising payments from the IT sector, introducing new levies on technology and car imports, increasing duties on gambling companies and targeting the personal income of “foreign agents”, as the Kremlin formally labels its critics.
The Kremlin guidelines to media covering these changes, which were first reported by the independent Russian outlet Meduza, begin with a recommendation not to make the budget “the headliner” and get ready for “countering the information attack”, primarily in relation to VAT, which affects all citizens.
The media should instead focus on the need to step up defence spending for the sake of a peaceful life, especially given the rise in Ukrainian attacks on Russian territory, the guidelines recommended.
They also suggested shaping the narrative to give the impression that the west supports prolonging the war in Ukraine and that western governments favour cuts to social spending in their own countries to bolster defence.
Outlets should “refrain from mocking the militaristic statements of European and Nato leaders” and not deny “the seriousness of their intentions”, the guidelines advised.
In contrast to the west, the guidelines suggested, Russia was opting for a VAT increase rather than reducing support for families or scaling back regional infrastructure development.
To underpin that message, the media should “widely showcase” the infrastructure investments already made, demonstrating new schools and hospitals, as well as plans for further development.
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