Sweeping Policy Changes Take Effect in Russia
The Russian Federation has ushered in 2026 with a series of significant policy changes, including the implementation of year-round military conscription, an increase in the Value-Added Tax (VAT) to 22 percent, and a rise in utility tariffs. These measures, effective January 1, 2026, are part of a broader effort to bolster state revenues and streamline administrative processes.
Year-Round Military Conscription Introduced
Russian President Vladimir Putin signed a decree in late December 2025, mandating year-round military conscription for 2026. This marks a departure from the traditional seasonal draft campaigns, with conscription offices now operating continuously from January 1 to December 31, 2026.
The decree sets a target to draft 261,000 men aged 18 to 30 for compulsory military service throughout the year. While conscription procedures, including medical examinations and psychological assessments, will occur year-round, the actual dispatch of conscripts to military service will maintain its traditional two-phase schedule: April 1 to July 15 and October 1 to December 31. This reform is intended to ease the administrative burden on recruitment offices and enhance the efficiency of mobilization processes.
VAT Increased to 22 Percent Amid Broader Tax Reforms
Effective January 1, 2026, Russia's standard Value-Added Tax (VAT) rate has increased from 20 percent to 22 percent. This hike applies to most goods and services, though a reduced 10 percent rate will continue for socially essential goods such as food, medicines, and children's products.
The VAT increase is a key component of a comprehensive tax reform package approved by the State Duma in November 2025. The primary objective of these changes is to address the federal budget deficit, which has been impacted by increased military expenditures and fluctuating oil and gas revenues. Additionally, the income threshold for VAT exemption for small businesses operating under simplified tax systems will be lowered, bringing more enterprises into the standard VAT framework.
Utility Tariffs See Nationwide Increases
Household utility tariffs across Russia have also risen, with the first stage of increases taking effect on January 1, 2026. This initial adjustment averages 1.7 percent nationwide and is directly linked to the new VAT rate.
A more substantial increase is scheduled for October 1, 2026, with regional variations ranging from 8 percent to as much as 19.7 percent. Overall, utility tariffs are projected to increase by an average of almost 18 percent in 2026, with some regions experiencing hikes exceeding 40 percent. While officially attributed to the 'need for infrastructure development,' some analyses suggest these tariff increases are also intended to help finance the country's military spending.
5 Comments
Bermudez
The push for administrative efficiency in conscription is understandable, but the constant threat of being drafted will create significant anxiety among young men. A balance between state needs and individual well-being is essential.
Habibi
Improvements to national infrastructure are always welcome, yet the steep increase in utility tariffs seems excessively burdensome for average families. There must be a more gradual or subsidized approach to these costs.
Muchacha
Efficient conscription makes sense. It strengthens our military readiness.
Manolo Noriega
Investing in infrastructure and defense is vital. These decisions show leadership.
Fuerza
It's clear the government needs to address budget deficits, especially with increased military spending, but these combined measures place a heavy burden on citizens. I hope these sacrifices genuinely lead to a more stable future, not just more hardship.