Defence & Security30 Oct 2026 · about 6 min

State Duma Passes Record Defense Spending Budget in First Reading

The brief

A federal budget is a government’s plan for raising money and spending it over a set period. It shows which priorities receive public funds and how those funds will be supported by taxes and other revenue. This draft covers three years and places defense and security at its center. Passing a bill in its first reading means the State Duma has accepted its main ideas and structure. It does not mean the budget is final. Lawmakers can still consider changes before a second reading, when the details receive closer examination. The draft passed with 372 votes in favor, 51 abstentions, and none against. It now moves to a second reading, then to the Federation Council. If approved there, it still requires President Vladimir Putin’s signature before becoming law.

What is a federal budget, and what does it mean that the State Duma passed this one in its first reading?

Passing a bill in its first reading means the State Duma has accepted its main ideas and structure. It does not mean the budget is final. Lawmakers can still consider changes before a second reading, when the details receive closer examination.

The draft passed with 372 votes in favor, 51 abstentions, and none against. It now moves to a second reading, then to the Federation Council. If approved there, it still requires President Vladimir Putin’s signature before becoming law.

How large are Russia’s planned defense and security expenditures compared with the government’s total spending?

Russia’s planned defense spending is unusually large within the proposed budget. The draft allocates 17.1 trillion rubles, listed as $202.6 billion, to national defense. That amount represents more than one-third of total federal expenditures.

Security spending becomes even larger when national security and policing are included. Those areas receive a 7.6% increase, bringing combined defense and security spending to 21.3 trillion rubles, listed as $262.1 billion. Together, they account for 44% of total government spending.

This scale shows the budget’s dominant priority: supporting military and security needs. The article links the spending to the war in Ukraine and says the budget also provides for participants in the “special military operation” and their families. Civilian areas face reductions as a result.

Which new taxes and levies does the draft budget propose, and what spending are they intended to help fund?

The proposed budget uses several revenue measures to support higher government spending. It would impose a 22% value-added tax on cross-border online retail and add a small customs fee to small international packages. These measures target purchases and deliveries crossing Russia’s borders.

The draft also proposes a progressive tax scale reaching 22% on passive personal income. It adds a 35% levy on dividend transfers to non-resident Type C accounts and a 30% tax on excess corporate profits in mining and metallurgy. Each measure broadens or increases the money collected by the government.

The article says these taxes and levies are intended to offset soaring military expenditures. They form part of a wider effort to fund the war-related budget priorities while the government redirects money away from several civilian sectors. The proposal still requires further approval before taking effect.

Which civilian sectors would receive less funding, and how would that change the government’s spending priorities?

The draft budget shifts resources toward defense and security by reducing planned funding for civilian priorities. Economic support and healthcare would each decline by 3%. Social support would fall by 6%, while housing and utilities would receive an 8% cut.

These reductions are not isolated savings. They occur alongside a proposed 17.1 trillion rubles for national defense and a 7.6% increase in national security and policing. Combined, defense and security would absorb 44% of total government spending, or 21.3 trillion rubles.

The result is a clear change in spending priorities. Military needs and security forces would receive a much larger share, while several public services and economic programs receive less. Finance Minister Anton Siluanov says the plan still preserves social obligations, but the listed cuts show the pressure created by rising war-related costs.

What happens after the first reading, and which institutions must still approve and sign the budget?

A first-reading vote is only the opening legislative approval described in the article. The draft now advances to a second reading in the lower-house State Duma. That stage gives lawmakers another opportunity to examine and potentially revise the bill before it moves onward.

After the second reading, the budget goes to the upper-house Federation Council for a vote. The two parliamentary chambers therefore remain involved after the initial State Duma decision. The article does not state whether the Federation Council must approve amendments separately.

If the Federation Council votes for the bill, it still requires a final signature from President Vladimir Putin. Only after these remaining steps would the proposed budget complete the approval process described. Until then, the tax increases, spending allocations, and sector cuts remain part of a draft rather than a completed law.

How do value-added taxes, income taxes, dividend taxes, and corporate profit taxes raise revenue, and who generally bears their costs?

A value-added tax is charged as goods or services move through sales, so the final price often includes part of the tax. An income tax takes a share of a person’s taxable earnings, while a progressive scale charges higher rates at higher income levels. These taxes raise public revenue directly from economic activity.

A dividend tax applies when companies distribute profits to shareholders or other recipients. A corporate profit tax takes part of a company’s earnings, with the proposal targeting excess profits in mining and metallurgy. The proposed levy on dividends to non-resident Type C accounts works at the payment stage.

Generally, consumers bear VAT through prices; individuals bear income tax; dividend recipients bear dividend tax; and companies bear profit taxes. Costs can also spread through lower returns, prices, wages, or investment. The article identifies the proposed rates but does not measure those wider effects.

Why must governments make trade-offs between defense spending, public services, and taxation when resources are limited?

Governments have limited revenue, so choosing one priority affects others. Defense, healthcare, social support, housing, and economic programs all compete for funds. Taxation can provide more money, but taxes also place costs on households, investors, and companies. Budget decisions therefore involve balancing public needs against available resources.

Russia’s draft makes this trade-off visible. It allocates 17.1 trillion rubles to defense and raises security and policing spending by 7.6%. At the same time, healthcare and economic support fall by 3%, social support by 6%, and housing and utilities by 8%.

The government also proposes new revenue measures, including a 22% VAT on cross-border online retail and taxes on passive income, dividends, and excess corporate profits. These choices are intended to fund rising military costs, but they leave less room for civilian spending and increase the importance of later legislative decisions.

This brief was written by AI from the original reporting and checked by other models. Names, figures and quotes come from the source; read it for full context.