Russia plans record 17.1 trillion rubles for military in 2027 budget, cuts social spending
Reuters reports that Russia's draft 2027 budget sets record military spending while cutting funding for social policy, education, healthcare, and the economy compared to last year's plan. The government intends to cover part of the increase with new tax hikes.
Russia's government has earmarked a record 17.1 trillion rubles for military spending in its draft 2027 budget, up sharply from the 12.1 trillion rubles budgeted for 2026, Reuters reported after reviewing budget documents.
At the same time, funding for several social categories will fall compared with last year's plan. Spending on "social policy" — which covers pensions, payments to combat veterans, and maternity benefits — will drop by 7%. Education spending will fall by 6%, and healthcare spending by 6.8%. The "national economy" category, covering road construction, infrastructure projects, and subsidies for agriculture and other sectors, will shrink by 7.4%.
Rising debt-servicing costs
The documents show debt-servicing costs will rise by 21.6% in 2027 compared with last year's plan, reaching 9.4% of total budget spending, with that share projected to climb further to 10.6% by 2029.
New taxes to help fund the military
According to the outlet The Bell, part of the funding for higher 2027 military spending is expected to come from a fresh round of tax increases that could bring around 1.5 trillion rubles into state coffers. A tax on the metallurgical industry's excess 2026 profits would contribute 200 billion rubles. A progressive tax on Russians' passive income — including dividends, deposit interest, and proceeds from property sales — could add another 500–700 billion rubles, according to estimates by economist Dmitry Polevoy. The remainder is expected to come from other measures, including a 15% tax on mutual funds' profits, an increase in the tax on dividends paid into nonresidents' type C accounts from 15% to 35%, and a 22% value-added tax on purchases from foreign online marketplaces.
The Bell also noted that some of the increase in military spending has already materialized in 2026, with actual spending this year expected to significantly exceed what was originally budgeted.
