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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 continues to drain the Kremlin’s coffers, the government is scrambling to find new ways to finance it.

Read more: Ukraine-Russia war latest updates

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 mooted by Russian president Vladimir Putin 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.

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

“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.

Pic: AP
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Pic: AP

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

The proposals will also see corporation tax 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.

A woman takes photos of art about Russia's war in Ukraine in 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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Pope Francis’s final moments reveal how quickly he deteriorated before death

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Pope Francis's final moments reveal how quickly he deteriorated before death

Pope Francis died little more than half an hour after being taken ill, Vatican sources have told Sky News.

Pope Francis woke at 6am on Monday, and was fine for at least an hour, sources said, as they revealed details of the pontiff’s final moments.

Around 7am, the Vatican’s medical unit received an emergency call from his Casa Santa Marta apartment.

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Where will Pope Francis be buried?

Pope latest – Prince William to attend funeral

An urgent transfer to the Gemelli hospital, where he was treated for pneumonia earlier this year, was among the options considered.

A request for an urgent escort from the Vatican was received by Rome police after 7am, sources there said, but, given how quickly his condition worsened, it was cancelled by Vatican officials before 7.35am.

Francis died at the age of 88, a day after making his final public appearance at St Peter’s Square, where he greeted crowds on Easter Sunday, one of the most important days of the Christian calendar.

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First images of pope’s casket

The Vatican said he died from a stroke that led to a coma and irreversible heart failure.

He is currently lying in state in the Santa Marta Domus in a private viewing for Vatican residents and the papal household.

Francis will be laid to rest Saturday, the Vatican announced on Tuesday, after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects.

The funeral will take place outside, in the square in front of St Peter’s Basilica, and will start with a procession led by a priest carrying a cross, followed by the coffin and ordained clergy.

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‘Many were in tears, I was in tears’

Cardinal Giovanni Battista Re, the dean of the College of Cardinals, will lead the service. Nine days of mourning begin afterwards.

Unlike his predecessors, Francis will be buried in the Basilica of Santa Maria Maggiore (St Mary Major), as per his final burial wishes, announced on Monday.

The basilica is dedicated to Mary, the Mother of God, and is where Francis traditionally went to pray before and after foreign trips.

He will be the first pope to be buried outside the Vatican in more than a century.

In another change from tradition, he will be buried in a simple wooden casket, forgoing the centuries-old practice of burying the late pope in three interlocking caskets made of cypress, lead, and oak.

Prince William will attend the funeral on behalf of King Charles, Kensington Palace has said.

Cardinals will gather in a conclave to choose his successor afterwards.

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Francis, the first Jesuit and Latin American pontiff, had suffered from a chronic lung disease and had part of a lung removed as a young man.

Health issues plagued him throughout his later life, and he was admitted to Gemelli hospital in Rome on 14 February for a respiratory crisis that developed into double pneumonia. He stayed at the hospital for 38 days before being released.

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Kristi Noem: Top Trump official’s handbag – containing $3,000 in cash and security pass – stolen in burger restaurant

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Kristi Noem: Top Trump official's handbag - containing ,000 in cash and security pass - stolen in burger restaurant

A bag belonging to the US Homeland Security Secretary was stolen on Sunday night – containing thousands of dollars in cash and an ID card that gives access to secure agency buildings.

Kristi Noem was eating at a Washington DC burger restaurant with family when a man in a face covering sat near her table and stole her purse, according to two people familiar with the theft.

Officials confirmed the theft to Sky News’ US partner NBC News on Monday.

The cabinet secretary was carrying $3,000 (£2,243) in cash because “her entire family was in town including her children and grandchildren”, Department of Homeland Security spokesperson Tricia McLaughlin told NBC.

“She was using the withdrawal to treat her family to dinner, activities and Easter gifts.”

US Homeland Security secretary Kristi Noem visited CECOT in March. Pic: Reuters
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The purse contained her ID card. Reuters file pic

Just before 8pm, a man wearing an N-95 mask walked into the restaurant and up a few stairs to where Ms Noem was eating dinner.

He sat near her table and moved his chair close to hers before sliding her purse toward him with his foot, according to surveillance footage viewed by law enforcement, the sources said.

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Within minutes, the man had Ms Noem’s purse under his jacket and walked out of the restaurant.

At least two on-duty members of the US Secret Service were in the restaurant – between Ms Noem and the front doors – according to a source who witnessed the meal.

They said the restaurant wasn’t very busy at the time.

The purse also contained credit cards, blank cheques, her passport, driver’s licence and a set of keys.

It’s unclear whether Ms Noem was specifically targeted – and investigators are looking into whether the man knew who the purse belonged to.

When asked about the incident, Ms Noem said: “I don’t think I can comment on it yet. It’s not resolved yet.”

She said the Secret Service was aware but said she hadn’t spoken to agency personnel about what happened.

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Ms Noem is a vocal supporter of Donald Trump’s policies of deporting undocumented immigrants and fortifying the US-Mexico border to slow illegal migration.

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Starmer and Zelenskyy discuss ending Russia’s ‘brutal war’ – as Putin says says he is open to bilateral talks on longer ceasefire

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Starmer and Zelenskyy discuss ending Russia's 'brutal war' - as Putin says says he is open to bilateral talks on longer ceasefire

Sir Keir Starmer and Volodymyr Zelenskyy spoke about ending Russia’s “brutal war” on Ukraine in their latest phone call on Easter Monday, as Vladimir Putin said he was open to bilateral talks.

The prime minister and Ukrainian president spoke on Monday afternoon, when Sir Keir “reiterated his iron-clad support for Ukraine“.

A Downing Street spokesperson added that the prime minister “said that the UK supports Ukraine’s calls for Russia to commit to a full ceasefire and that now is the time for Putin to show he is serious about ending his brutal war”.

“They discussed the latest developments on the Coalition of the Willing, and looked forward to further progress towards a just and lasting peace,” the spokesperson added.

Mr Zelenskyy later said on social media that he had a “good and detailed conversation” with the prime minister, and added Ukrainian officials will be in London for talks on ending the war with Russia on Wednesday.

“We are ready to move forward as constructively as possible, just as we have done before, to achieve an unconditional ceasefire, followed by the establishment of a real and lasting peace,” he added.

The Ukrainian president added that the 30-hour Easter truce, which both Kyiv and Moscow accuse the other of violating, showed that Russia “are prolonging the war”.

It comes as Mr Putin proposed bilateral talks with Ukraine on a longer ceasefire, which would mark the first time Russia held such talks since a failed peace deal soon after the invasion in 2022.

Speaking to a state TV reporter, the Russian president said: “We always have a positive attitude towards a truce, which is why we came up with such an initiative (the Easter truce), especially since we are talking about the bright Easter days.”

When asked about Mr Zelenskyy’s calls to extend the 30-hour ceasefire into a 30-day pause on civilian targets, he added: “This is all a subject for careful study, perhaps even bilaterally. We do not rule this out.”

The Ukrainian president said on Sunday evening that the Russian army had “violated Putin’s ceasefire more than 2,000 times” during the day, and accused Russia of “failing” to “uphold its own promise of a ceasefire”.

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From Saturday: Why Putin offered an Easter truce?

It also comes after Donald Trump has said he hopes Russia and Ukraine “will make a deal this week,” after he and his secretary of state Marco Rubio warned that the US will walk away from efforts to broker a peace deal unless there are clear signs of progress soon.

The US president said on his Truth Social platform that both countries would “start to do big business” with the US after ending the war.

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Last month, Ukraine accepted Mr Trump’s proposal for a 30-day truce, but Mr Putin refused to back a full 30-day ceasefire, saying crucial issues of verification had not been sorted out.

He then said he would agree not to target Ukraine’s energy infrastructure. However, both sides have accused each other of breaking the moratorium on attacks on energy targets and at sea.

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