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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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China’s premier air show wows spectators – but the West won’t have liked seeing Russia’s jets

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China's premier air show wows spectators - but the West won't have liked seeing Russia's jets

Outgoing US President Joe Biden is set to meet his Chinese counterpart Xi Jinping today for what is likely to be his last time as US president.

The two leaders are expected to hold talks on the sidelines of a meeting of Asia-Pacific leaders in the Peruvian capital, Lima.

It comes against the backdrop of increasing tension in the US-China relationship with a potential trade war looming under a Trump presidency, several China hawks tapped for US cabinet positions and China’s growing status among global south countries as an emerging leader of an alternative world order.

This week China was focused on events in the southern city of Zhuhai.

First there was a car ramming attack at Zhuhai’s sports stadium which left 25 people dead. A shocking event that was heavily censored in China.

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What happened at Zhuhai sports centre?

Less than an hour’s drive away the country was holding its premier air show.

It was a military enthusiast’s dream, and not even intermittent rain could keep the crowds of tens of thousands of people away from relishing in the roar of jets in the skies above Zhuhai.

China’s fighter jet fleet

One of the main drawcards was China’s newest stealth fighter the J-35A. It will join the country’s J-20 in service for the People’s Liberation Army Air Force (PLAAF).

A J-35A stealth aircraft flies during the exhibition. Pic: Reuters
Image:
A J-35A stealth aircraft flies during the exhibition. Pic: Reuters

The J-10C was China’s aerobatics star of the show. There were daily displays of its prowess in sky-high manoeuvres and formations that impressed onlookers, leaving a streak of colours across the cloudy rain-clogged sky.

Pic from Nicole Johnston and team
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China’s aerobatic team

China’s military modernsiation programme is continuing apace

It boasts the largest navy in the world and the largest armed forces by active-duty personnel.

The People’s Liberation Army (PLA) Airforce is developing fast too.

Dr Nicole Leveringhaus, a China security expert from King’s College London, says: “China started with very little. It was devastated by wars on many fronts in the 30s and 40s. Its defence industry was depleted. In 70-plus years it’s built itself up and now we’re seeing the results.

“It’s an impressive feat to go from a bloated land-based peasant guerrilla army to what it has to today.”

Chinese pride and nationalism on display

Enjoying the air show spectacle, military fan Liu Liansong said: “I think the air show is great. It is a firm manifestation of the air force’s development from scratch. We as Chinese people feel very proud.”

Defence exhibition near Beijing
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Inside the air show


Defence exhibition near Beijing

The air show included massive exhibition halls of military hardware, from drones to robotics, firearms and mock missiles. Merely getting from one end of the venue to the other through densely packed crowds was a mission.

Russia in the air

The other crowd puller this week was Russia’s aerobatic air force unit, performing daily theatrics at dizzying speeds.

It is another sign of the deepening ties between China and Russia.

Defence exhibition
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Russia’s aerobatic team shows off for the crowd

One Russian tourist and recreational pilot, Yulia, told Sky News: “Both sides are looking for good communication in business, aviation and in many spheres including tourism.”

The secretary of Russia’s security council and former defence minister Sergei Shoigu also visited the air show, viewing both Chinese and Russian-made jets.

In Beijing, secretary Shoigu was quoted by Russian state media as saying: “I see the most important task as countering the policy of ‘dual containment’ of Russia and China pursued by the United States and its satellites.”

Defence exhibition near Beijing
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One of Russia’s jets up close

Defence exhibition near Beijing

The West is increasingly frustrated by China’s support of Russia. The US has sanctioned two Chinese companies, accusing them of being involved in the production of Russian aerial drones used on the battlefield.

China insists it is not supplying weapons to Russia.

One of the companies, Xiamen Limbach Aircraft Engine Co, had a small stand in one of the exhibition halls. Its representatives declined Sky News’ request for an interview.

Tariff war brewing

Despite the raw military might on display in Zhuhai, in China there is uncertainty and unease about what an impending Donald Trump presidency will mean for global trade.

Defence exhibition near Beijing.

President-elect Trump has threatened blanket tariffs of up to 60% on Chinese products exported to the US.

This would be a serious blow to China’s target GDP growth and comes at a time when the country’s economy faces deep-set challenges.

Read more:
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Scholz’s phone call with Putin opens ‘Pandora’s box’, says Zelenskyy

At the other end of the country, in Beijing analysts are weighing up the impact of possible tariffs and the Chinese government’s options to respond.

Senior Asia analyst Chim Lee, from The Economist Intelligence Unit, is not optimistic that a US-China agreement to minimise the damage can be reached.

Senior Asia Analyst Chim Lee
Image:
Senior Asia analyst Chim Lee

“I think both sides have recognised that the era of making deals is passed,” Mr Lee said.

“We’re going to see China starting with some targeted measures, tariffs it feels more comfortable to impose,” he explained. “But there are also areas where China is starting to be a bit more aggressive.”

This action could include export controls on China’s production of critical minerals and retaliatory tariffs on US agriculture exports.

Trade competition, military posturing and complicated geo-political alliances have set the stage for a challenging next phase in US-China relations.

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Pictures show moment Israeli bomb exploded at Beirut apartment block

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Pictures show moment Israeli bomb exploded at Beirut apartment block

New pictures show the moment of impact as an Israeli missile hit a Beirut apartment block and exploded.

The block was one of five buildings destroyed by airstrikes on Friday alone.

Israel launched airstrikes in the southern suburbs of Beirut in a fourth consecutive day of intense attacks.

There were no immediate reports of casualties.

An Associated Press photographer captured a sequence of images showing an Israeli bomb approaching and hitting a multi-storey apartment building in Beirut’s Tayouneh area.

A bomb dropped from an Israeli jet prepares to hit a building in Tayouneh, Beirut, Lebanon, Friday, Nov. 15, 2024. (AP Photo/Hassan Ammar)
A bomb dropped from an Israeli jet prepares to hit a building in Tayouneh, Beirut, Lebanon, Friday, Nov. 15, 2024. (AP Photo/Hassan Ammar)

Richard Weir, a senior crisis, conflict and arms researcher at Human Rights Watch, reviewed the close-up photos to determine what type of weapon was used.

“The bomb and components visible in the photographs, including the strake, wire harness cover, and tail fin section, are consistent with a Mk-84 series 2,000-pound class general purpose bomb equipped with Boeing’s joint directed attack munition tail kit,” he told AP.

A bomb dropped from an Israeli jet hits a building in Tayouneh, Beirut, Lebanon, Friday, Nov. 15, 2024. (AP Photo/Hassan Ammar)
Thick smoke and flames erupt from an Israeli airstrike on Tayouneh, Beirut, Lebanon, Friday, Nov. 15, 2024. (AP Photo/Hassan Ammar)
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Pics: AP

Smoke covers a building that collapses following an Israeli airstrike in Tayouneh, Beirut, Lebanon, Friday, Nov. 15, 2024. (AP Photo/Hassan Ammar)
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Smoke covers a building that collapses following the strike. Pic: AP

Deadly strikes as bombardment stepped up

Israel stepped up its bombardment this week – an escalation that has coincided with signs of movement in US-led diplomacy towards a ceasefire.

The Israeli military said its fighter jets attacked munitions warehouses, a headquarters and other Hezbollah infrastructure. It issued a warning on social media identifying buildings ahead of the strikes.

Meanwhile, an Israeli airstrike killed five members of the same family in a home in Ain Qana in the southern province of Nabatiyeh, Lebanon’s state media said.

The report said a mother, father and their three children were killed but didn’t provide their ages.

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Three other Israeli strikes killed six people and wounded 32 in different parts of Tyre province on Friday, also in south Lebanon, the report said.

Video footage also showed a building being struck and turning into a cloud of rubble and debris that billowed into Horsh Beirut, the city’s main park.

Civil defense workers extinguish a fire as smoke rises from the site of an Israeli airstrike in Tayouneh, Beirut, Lebanon, Friday, Nov. 15, 2024. (AP Photo/Hassan Ammar)
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Residents check the site of the airstrike in Tayouneh, Beirut. Pic: AP

Residents check the site of an Israeli airstrike in Tayouneh, Beirut, Lebanon, Friday, Nov. 15, 2024. (AP Photo/Hassan Ammar)
Residents check the site of an Israeli airstrike in Tayouneh, Beirut, Lebanon, Friday, Nov. 15, 2024. (AP Photo/Hassan Ammar)

More than 3,200 people have been killed in Lebanon during 13 months of fighting between Israel and Hezbollah – most of them since mid-September.

About 27% of those killed were women and children, according to Lebanon’s health ministry.

Israel dramatically escalated its bombardment of Lebanon from September, vowing to cripple Hezbollah and end its barrages in Israel.

Friday’s strikes come as Lebanon’s caretaker prime minister has asked Iran to help secure a ceasefire in the war between Israel and Hezbollah.

The prime minister appeared to urge Ali Larijani, a top adviser to Iran’s supreme leader, Ali Khamenei, to convince the militant group to agree to a deal that could require it to pull back from the Israel-Lebanon border.

Iran is a main backer of Hezbollah and for decades has been funding and arming the Lebanese militant group.

On Thursday, Eli Cohen, Israel’s energy minister and a member of its security cabinet, said that prospects for a ceasefire with Lebanon were the most promising since the conflict began.

The Washington Post reported Israel’s Prime Minister Benjamin Netanyahu was rushing to advance a Lebanon ceasefire to deliver an early foreign policy win to his ally, US President-elect Donald Trump.

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Elon Musk hints 80-hour-a-week DOGE job for ‘high-IQ revolutionaries’ will be unpaid

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Elon Musk hints 80-hour-a-week DOGE job for 'high-IQ revolutionaries' will be unpaid

“Super high-IQ revolutionaries” who are willing to work 80+ hours a week are being urged to join Elon Musk’s new cost-cutting department in Donald Trump’s incoming US government.

The X and Tesla owner will co-lead the Department Of Government Efficiency (DOGE) with former Republican presidential candidate Vivek Ramaswamy.

And in a post on X, the official DOGE account put out a call to arms for people to sign up and help “dismantle government bureaucracy”.

The post said: “We are very grateful to the thousands of Americans who have expressed interest in helping us at DOGE.

“We don’t need more part-time idea generators.

“We need super high-IQ small-government revolutionaries willing to work 80+ hours per week on unglamorous cost-cutting.

“If that’s you, DM this account with your CV. Elon & Vivek will review the top 1% of applicants.”

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Elon Musk speaks after President-elect Donald Trump spoke during an America First Policy Institute gala at his Mar-a-Lago estate. Pic: AP Photo/Alex Brandon
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Elon Musk speaking at an event held at Donald Trump’s Mar-a-Lago estate. Pic: AP Photo/Alex Brandon

In a reply to an interested party, Mr Musk suggested the lucky applicants would be working for free.

“Indeed, this will be tedious work, make lost of enemies & compensation is zero,” the world’s richest man wrote.

“What a great deal!”

When announcing the new department, President-elect Donald Trump said Mr Musk and Mr Ramaswamy “will pave the way for my administration to dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies”.

Mr Musk has previously made clear his desire to see cuts to “government waste” and in a post on his X platform suggested he could axe as many as three-quarters of the more than 400 federal departments in the US, writing: “99 is enough.”

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