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Signs of Russia’s so-called special military operation are everywhere in Moscow, from roadside recruitment adverts to Z-themed souvenirs.

Now there is another example – a proposed tax hike that amounts to the biggest shake-up of the Russian tax system in a quarter of a century.

As the war in Ukraine drains the Kremlin’s coffers, the government is scrambling to find new ways to finance it.

Pro-Russian 'Z' patches on display at a store in Moscow
View of a store in Moscow selling pro-Russia and pro-war merchandise

Its answer is a new progressive income tax rate that will target the wealthy, as well as a rise in corporation tax.

The proposals were first proposed by Vladimir Putin, the Russian president, on the campaign trail ahead of his re-election in March. Analysts say he was forced to act.

Defence spending has surpassed 8% of GDP and is sucking up nearly a third of the state budget this year.

“It seems like the tax reform is a tool to move the economy from butter toward guns,” Alexander Kolyandr, a non-resident senior fellow at the Centre for European Policy Analysis, said.

“The government is no longer concerned about you eating well, but rather about you producing more guns.”

The reforms mark a dramatic departure from the Russian leader’s previous tax policies.

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In 2001, shortly after assuming office, he introduced a flat rate of 13% that was applied universally, and most Russians have been paying the same rate since.

The move simplified a previously complicated tax regime which few adhered to and it successfully boosted revenues – and his popularity – as a result.

A higher rate of 15% was established in 2021 for those earning more than five million roubles (around £43,500).

Now the finance ministry wants to lower the threshold for the 15% rate, so it applies to annual incomes from 2.4 (around £20,800) to five million roubles, and introduce more bands above.

Incomes between five and 20 million roubles (around £43,500 to £174,000) will be taxed at 18%, those between 20-50 million roubles (around £174,000 to £434,000) at 20%, and anything over 50 million roubles at 22%.

Under the proposals, corporation tax will also increase from 20% to 25%.

Pro-Russian artwork in Moscow, featuring the 'Z' icon used throughout the war in Ukraine

If adopted by the Russian parliament, the changes will come into force next year and generate 2.6 trillion roubles (£22.5bn) in budget revenues, the government said.

“For the past two years, the Russian economy has been running on state spending,” Mr Kolyandr said.

“It cannot last forever, because in effect, it’s mortgaging your future.

“To get this mortgage more appealing, you need more money.”

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According to the Kremlin, 3% of the workforce will be affected by the changes, which it insists are fair.

It says the reforms should solve national problems, reduce inequality and help develop Russia’s regions.

But the official line has been met with some scepticism on the streets of Moscow.

“I think they don’t have enough money for the special military operation, that’s why they’re introducing it,” Sergei told Sky News in Moscow.

Ulyana agreed, adding: “I don’t think it’s fair to tax more from 200,000 [roubles a month].

“This will just affect people who work a lot.”

In reality, everyone here is affected by Russia’s current path.

This is merely the latest impact, and it will be felt in people’s pockets.

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US envoy meets Putin for talks – as Trump urges Russia to ‘get moving’ on Ukraine

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US envoy meets Putin for talks - as Trump urges Russia to 'get moving' on Ukraine

Donald Trump’s special envoy Steve Witkoff has met Vladimir Putin for talks in Russia – as the US president called on Moscow to “get moving” with ending the war in Ukraine.

Mr Witkoff, who has been pressing the Kremlin to accept a truce, visited Mr Putin in St Petersburg after earlier meeting the Russian leader’s international co-operation envoy Kirill Dmitriev.

Mr Putin was shown on state TV greeting Mr Witkoff at the city’s presidential library at the start of the latest discussions about the search for a peace deal on Ukraine.

Before Friday’s meeting, Kremlin spokesman Dmitry Peskov played down expectations of a breakthrough and told state media the visit would not be “momentous”.

Follow the latest updates on the war in Ukraine

However, Sky News Moscow correspondent Ivor Bennett said he believes the meeting – Mr Witkoff’s third with Mr Putin this year – is significant as a sign of the Trump administration’s “increasing frustration at the lack of progress on peace talks”.

Earlier on Friday, Mr Trump issued his latest social media statement on trying to end the war, writing on Truth Social: “Russia has to get moving. Too many people ere [sic] DYING, thousands a week, in a terrible and senseless war – A war that should have never happened, and wouldn’t have happened, if I were President!!!”

Dialogue between the US and Russia, aimed at agreeing a ceasefire ahead of a possible peace deal to end the war, has recently appeared to have stalled over disagreements around conditions for a full pause.

President Donald Trump speaks at a cabinet meeting in the Cabinet Room of the White House, Thursday, April 10, 2025, in Washington. (Pool via AP)
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Mr Trump, pictured at a cabinet meeting at the White House earlier this week, has called for Russia to ‘get moving’. Pic: AP

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Secondary sanctions could be imposed on countries that buy Russian oil, Mr Trump has said, if he feels Moscow is dragging its feet on a deal.

Mr Putin has said he is ready in principle to agree a full ceasefire, but argues crucial conditions have yet to be agreed – and that what he calls the root causes of the war have yet to be addressed.

The Russian president wants to dismantle Ukraine as an independent, functioning state and has demanded Kyiv recognise Moscow’s annexation of Crimea and other partly occupied areas, and pull its forces out, as well as a pledge for Ukraine to never join NATO and for the size of its army to be limited.

Zelenskyy renews support calls after attack on home city

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Children killed in strike on Zelenskyy’s home town

Meanwhile, Ukrainian president Volodymyr Zelenskyy has renewed his appeals for more Patriot air defence systems after the deaths of 20 people, including nine children, who were killed when a Russian missile hit apartment buildings and a playground in his home city of Kryvyi Rih last week.

Speaking online at a meeting of the so-called Ramstein group of about 50 nations that provide military support to Ukraine, named after a previous meeting at America’s Ramstein air base in Germany in 2022, Mr Zelenskyy said recent Russian attacks showed Moscow was not ready to accept and implement any realistic and effective peace proposals.

Mr Zelenskyy also made his evening address to the nation, saying: “Ukraine is not just asking – we are ready to buy appropriate additional systems.”

The UK’s defence secretary, John Healy, has said this is “the critical year” for Ukraine – and has confirmed £450m in funding for a military support package.

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Tech executive and his family die after sightseeing helicopter crashes in New York

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Tech executive and his family die after sightseeing helicopter crashes in New York

A family of five Spanish tourists, including three children, have been killed in a helicopter crash in New York City.

A New York City Hall spokesman identified two of those killed as Agustin Escobar, a Siemens executive, and Merce Camprubi Montal – believed to be his wife, NBC News reported.

The pilot was also killed as the aircraft crashed into the Hudson River at around 3.17pm on Thursday.

New York Police commissioner Jessica Tisch said divers had recovered all those on board from the helicopter, which was upside down in the water.

“Four victims were pronounced dead on scene and two more were removed to local area hospitals, where sadly both succumbed to their injuries,” she said.

The helicopter ended up submerged and upside down. Pic: Reuters
Image:
The helicopter was submerged upside down in the Hudson. Pic: Reuters

A crane lifted out the wreck of the helicopter on Thursday evening. Pic: AP
Image:
A crane lifted out the wreckage on Thursday evening. Pic: AP

The Spanish president Pedro Sanchez called the news “devastating”.

“An unimaginable tragedy. I share the grief of the victims’ loved ones at this heartbreaking time,” he wrote on X.

Rotor blade ‘flew off’

The aircraft was on a tourist flight of Manhattan, run by the New York Helicopters company.

Witnesses described seeing the main rotor blade flying off moments before it dropped out the sky.

Agustin Escobar and Merce Camprubi Montal.
Pic: Facebook
Image:
Agustin Escobar and Merce Camprubi Montal.
Pic: Facebook

Lesly Camacho, a worker at a restaurant along the river in Hoboken, said she saw the helicopter spinning uncontrollably before it slammed into the water.

“There was a bunch of smoke coming out. It was spinning pretty fast, and it landed in the water really hard,” she said.

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Witness saw ‘parts flying off’ helicopter

Another witness said “the chopper blade flew off”.

“I don’t know what happened to the tail, but it just straight up dropped,” Avi Rakesh told Sky’s US partner, NBC News.

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Video on social media showed parts of the Bell 206 helicopter tumbling through the air and landing in the river.

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New York mayor confirms six dead

First responders walk along Pier 40, Thursday, April 10, 2025, in New York, across from where a helicopter went down in the Hudson River in Jersey City, N.J. (AP Photo/Jennifer Peltz)
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The crash happened near Pier 40. Pic: AP

New York Mayor Eric Adams confirmed the six deaths and said authorities believed the tourists were from Spain.

He said the flight had taken off from a downtown heliport at around 3pm.

Debris floats in the water at the scene where the helicopter crashed into the Hudson River.
Pic: AP
Image:
Pic: Cover Images/AP

The crash happened close to Pier 40 and the Holland tunnel, which links lower Manhattan’s Tribeca neighbourhood with Jersey City to its west.

Tracking service Flight Radar 24 published what it said was the helicopter’s route, with the aircraft appearing to be in the sky for 15 minutes before the crash.

The Federal Aviation Administration and the National Transportation Safety Board have started an investigation.

Agustin Escobar.
Pic:Europa Press/AP
Image:
Agustin Escobar.
Pic: Europa Press/AP

Thursday’s incident comes less than three month after 67 people died when an army helicopter and American Airlines jet collided over the Potomac River in Washington DC.

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Ksenia Karelina: Ballerina arrives home in US after ‘nightmare’ of Russian penal colony

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Ksenia Karelina: Ballerina arrives home in US after 'nightmare' of Russian penal colony

A former ballerina who spent more than a year in a Russian jail for donating £40 to a charity supporting Ukraine has returned home to the US after being freed in a prisoner exchange.

Ksenia Karelina landed at Joint Base Andrews in Maryland at around 11pm, local time, on Thursday.

A smiling Ms Karelina was greeted on the runway by her fiance, the professional boxer Chris van Heerden, and given flowers by Morgan Ortagus, President Donald Trump’s deputy special envoy to the Middle East.

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Ksenia Karelina arrives Thursday, April 10, 2025, at Joint Base Andrews, Md. (AP Photo/Alex Brandon)
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Ksenia Karelina arrives at Joint Base Andrews. Pic: AP

Van Heerden said in a statement he was “overjoyed to hear that the love of my life, Ksenia Karelina, is on her way home from wrongful detention in Russia.

“She has endured a nightmare for 15 months and I cannot wait to hold her. Our dog, Boots, is also eagerly awaiting her return.”

He thanked Mr Trump and his envoys, as well as prominent public figures who had championed her case, including Dana White, a friend of Mr Trump and CEO of the Ultimate Fighting Championship (UFC).

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Ms Karelina, 34, a US-Russian citizen also identified as Ksenia Khavana, was accused of treason when she was arrested in Yekaterinburg, in southwestern Russia, while visiting family in February last year.

Investigators searched her mobile phone and found she made a $51.80 (£40) donation to Razom, a charity that provides aid to Ukraine, on the first day of Russia’s invasion in 2022.

She admitted the charge at a closed trial in the city in August last year and was later jailed for 12 years, to be served in a penal colony.

At a cabinet meeting on Thursday, Mr Trump, who wants to normalise relations with Moscow, said the Kremlin “released the young ballerina and she is now out, and that was good. So we appreciate that”.

Ksenia Karelina is hugged by her boyfriend Chris van Heerden.
Pic: Reuters
Image:
Ksenia Karelina is hugged by her boyfriend, Chris van Heerden. Pic: Reuters

He said the release followed conversations with Russian President Vladimir Putin.

Russian security services accused her of “proactively” collecting money for a Ukrainian organisation that was supplying gear to Kyiv’s forces.

The First Department, a Russian rights group, said the charges stemmed from a $51.80 donation to a US charity aiding Ukraine.

Washington, which had called her case “absolutely ludicrous”, released Arthur Petrov, who it was holding on charges of smuggling sensitive microelectronics to Russia, in the prisoner swap in Abu Dhabi.

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Karelina was among a growing number of Americans arrested in Russia in recent years as tensions between Moscow and Washington spiked over the war in Ukraine.

Her release is the latest in a series of high-profile prisoner exchanges Russia and the US carried out in the last three years – and the second since Mr Trump took office.

White House national security adviser Mike Waltz said members of the Trump administration “continue to work around the clock to ensure Americans detained abroad are returned home to their families”.

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