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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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Ukraine vows to continue drone attacks until there’s a peace deal

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Ukraine vows to continue drone attacks until there's a peace deal

Ukraine says there will be no let-up in its punishing long-range drone attacks on Russia until Moscow agrees to peace.

The warning comes ahead of Vladimir Putin meeting Donald Trump in Alaska.

Ukraine war latest: Trump prepares for summit with Putin

It was made in a rare interview with one of the key commanders of Ukraine’s drone forces.

We met in an undisclosed location in woods outside Kyiv. Brigadier General Yuriy Shchygol is a wanted man.

There is a quiet, understated but steely resolve about this man hunted by Russia. His eyes are piercing and he speaks with precision and determination.

Brigadier General Yuriy Shchygol has been in charge of several devastating drone strikes against Russia
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Brigadier General Yuriy Shchygol has been in charge of several devastating drone strikes against Russia

His drone units have done billions of dollars of damage to Russia’s economy and their range and potency is increasing exponentially.

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“Operations”, he said euphemistically, “will develop if Russia refuses a just peace and stays on Ukrainian territory”.

“Initially, we had a few drones a month, capable of striking targets 100 to 250 kilometres away. Today, we have drones capable of flying 3,000 to 4,000 kilometres, and that’s not the limit, it’s constrained only by fuel supply, which can be increased”.

A Ukrainian drone struck this building in Kursk, Russia, on Friday. Pic: Kursk regional government/AP
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A Ukrainian drone struck this building in Kursk, Russia, on Friday. Pic: Kursk regional government/AP

Cars were also damaged in the strike. Pic: Kursk regional government/AP
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Cars were also damaged in the strike. Pic: Kursk regional government/AP

His teams had just carried off one of their most complicated and most devastating strikes yet. A massive fire was raging in an oil refinery in Volgograd, or Stalingrad as it was once called.

“If the refinery is completely destroyed, it will be one of the largest operations conducted,” Brigadier General Shchygol said. “There have been other major targets too, in Saratov and Akhtubinsk. Those refineries are now either non-operational or functioning at only 5% of capacity.”

Oil is potentially Vladimir Putin’s Achilles heel. So much of his economy and war effort is dependent on it. Donald Trump could cripple Russia tomorrow if he sanctioned it but so has appeared reluctant to do so, a source of constant frustration for the Ukrainians.

Military activity on both sides has increased as diplomacy has picked up pace.

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Moscow correspondent: What’s Putin’s strategy?

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In another long-range attack, Ukraine says it hit the port of Olya in Russia’s Astrakhan region, striking a ship loaded with drone parts and ammunition sent from Iran.

But on the ground, Russian forces have made a surprise advance of more than 15km into Ukrainian territory.

Ukraine says the intrusion can be contained, but it adds to fears about its ability to hold back the Russians along the 1000-mile frontline.

Russian soldiers prepare to launch a Lancet drone in an undisclosed location in Ukraine. Pic: Russian Defence Ministry Press Service/AP
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Russian soldiers prepare to launch a Lancet drone in an undisclosed location in Ukraine. Pic: Russian Defence Ministry Press Service/AP

Read more from Sky News:
Why was Putin invited to Alaska?
Russia sends heavyweights to summit
What to expect from pivotal meeting

Russia launches almost nightly drone attacks on Ukraine’s cities, killing civilians and striking residential targets.

General Yuriy says Ukraine picks targets that hurt Russia’s war effort, and it is constantly honing its capability.

“Each operation”, he says, “uses multiple types of drones simultaneously, some fly higher, others lower. That is our technical edge.”

How satisfying, I asked, was it to watch so much enemy infrastructure go up in smoke? He answered with detached professionalism.

“It does not bring me pleasure, war can never be a source of enjoyment. Each of us has tasks we could fulfil in peacetime. But this is war; it doesn’t bring satisfaction. However, it benefits the state and harms our enemy.”

Whatever happens in Alaska, General Yuriy and his teams will continue pioneering drone warfare, hitting Vladimir Putin’s economy where it hurts most.

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India ‘will not tolerate’ nuclear blackmail, says prime minister Narendra Modi in warning to Pakistan on Independence Day

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India 'will not tolerate' nuclear blackmail, says prime minister Narendra Modi in warning to Pakistan on Independence Day

India’s Prime Minister has warned Pakistan it will not succumb to, or tolerate, nuclear blackmail.

In Narendra Modi’s 12th consecutive speech from the ramparts of Delhi’s iconic Red Fort, he addressed the nation celebrating its 79th Independence Day from colonial Britain.

He laid emphasis on ‘Atmanirbhar’, or self-reliance, in defending India by increasing and developing a more powerful weapons system for security.

Mr Modi said: “India has decided, we will not tolerate nuclear blackmail. We have established a new normal. Now we will not distinguish between terrorists and those who nurture and support terrorists. Both are enemies of humanity”

The historic Red Fort in Delhi has traditionally been the venue for the prime minister's Independence Day address. Pic: Reuters
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The historic Red Fort in Delhi has traditionally been the venue for the prime minister’s Independence Day address. Pic: Reuters

Pic: AP
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Pic: AP

Narendra Modi (top centre) waves after his speech in Delhi. Pic: Reuters
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Narendra Modi (top centre) waves after his speech in Delhi. Pic: Reuters

This comes on the back of the conflict in May after the killing of 26 people by terrorists in Pahalgam, Kashmir. In retaliation, India launched attacks on terrorist infrastructure across the border.

Pakistan retaliated, which quickly escalated into both countries launching a series of missiles, armed drones and heavy gunfire on each other.

After four days of fighting, a ceasefire was agreed to between the two nuclear-armed neighbours that have fought wars and many skirmishes over decades.

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US President Donald Trump intervened saying: “I know the leaders of Pakistan and India. I know [them] very well. And they’re in the midst of a trade deal, and yet they’re talking about nuclear weapons… this is crazy.

“I’m not doing a trade deal with you if you’re going to have war, and that’s a war that spreads to other countries, you’ll get nuclear dust. When they start using nuclear weapons, that stuff blows all over the place and really bad things happen.”

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India and Pakistan agree on ceasefire

Pakistan Prime Minister Shehbaz Sharif immediately thanked the American president for the ceasefire and bringing about peace and stability in the region, also recommending him for the Nobel Peace Prize as a genuine peacemaker and his commitment to conflict resolution.

Mr Modi’s government is yet to acknowledge President Trump’s intervention and maintains that the Pakistani military initiated the ceasefire process and India agreed to halt military action.

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‘Pakistan has the upper hand’

In parliament, India’s Foreign Minister Subrahmanyam Jaishankar said: “There was no leader… nobody in the world that asked India to stop its operations. This is something the prime minister also said. There was no linkage of trade in any of these conversations and there was no talk between the prime minister and President Trump.”

Mr Modi’s speech is an audit of the year gone by and his future plans of strengthening the economy and of self-reliance in the face of very high tariffs imposed by President Trump for buying discounted Russian oil.

He spoke of bringing in structural reforms, welfare schemes for farmers, women’s empowerment, employment, technology, clean energy and the green industry, but also raised concerns about rising obesity levels.

Schoolchildren dressed with tree leaves perform during Independence Day celebrations in Kolkata. Pic: AP
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Schoolchildren dressed with tree leaves perform during Independence Day celebrations in Kolkata. Pic: AP

Assam Police Commandos in a motorbike formation at a parade in Guwahati. Pic: AP
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Assam Police Commandos in a motorbike formation at a parade in Guwahati. Pic: AP

India has the fourth largest economy in the world and is expected to be the third largest before Mr Modi’s current term ends in 2029.

Although when it comes to GDP per capita income, which serves as an indicator of individual prosperity, India is ranked 144 out of 196 countries.

The big economy illusion of GDP size has little to do with the well-being and fortune of its people, something the government refuses to acknowledge.

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Read more from Sky News:
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In its 2024 report, Paris-based World Inequality Lab said the inequality in India now is worse than under British rule. The research stated that 1% of the wealthiest Indians hold 40% of its wealth and enjoy a quarter of the nation’s income.

Comparing the ‘British Raj’ to the ‘Billionaire Raj’, the study said there are now 271 billionaires in the country and 94 new ones were added the previous year. The rise of top-end inequality in India has been particularly pronounced in terms of wealth concentration in the Modi years between 2014-15 and 2022-23.

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Explained: The UK-India trade deal

With over 1.46 billion people, India is the most populous country, making up 17.8% of the global population.

More than half the country is under 30, and it has one of the lowest old-age dependency ratios, enabling productivity, higher savings and investment.

A key challenge for the government is to match employment with its growing young population. It’s even more critical as artificial intelligence (AI) is increasingly used in production and services, eating into jobs.

Indian Army's Bihar Regiment marching in Kolkata during Independence Day celebrations. Pic: AP
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Indian Army’s Bihar Regiment marching in Kolkata during Independence Day celebrations. Pic: AP

Bagpipers from Jammu Kashmir Police performing in Srinagar, Indian-controlled Kashmir. Pic: AP
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Bagpipers from Jammu Kashmir Police performing in Srinagar, Indian-controlled Kashmir. Pic: AP

Last week, President Trump levied an additional 25% tariff on India for buying Russian oil, taking the total tariff level to over 50% and hitting Indian manufacturing and trade.

“I don’t care what India does with Russia. They can take their dead economies down together,” the president said.

Since the Ukraine war, India has been buying discounted Russian crude and its imports have risen from 3% in 2021 to about 35% to 40% in 2024.

Defending its stance, India says it does so for its energy security and to protect millions of its citizens from rising costs.

It’s a national day of celebration with patriotic fervour all around, but also a grim reminder of the tragedy of partition – the trauma of which still haunts its people.

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Israel releases video showing public humiliation of prominent Palestinian prisoner

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Israel releases video showing public humiliation of prominent Palestinian prisoner

The spectacle of Israel’s Itamar Ben-Gvir humiliating perhaps the most popular of all Palestinians in his prison cell was as unedifying as the national security minister’s extremist politics.

“You won’t win. Whoever messes with the people of Israel, whoever murders our children, whoever murders our women, we will erase him,” Ben-Gvir told Marwan Barghouti, the figurehead of secular Palestinian nationalism, who appeared shocked and scared.

His lawyer told Al-Arabiya TV that Ben-Gvir threatened him directly and that his life is in danger.

Imprisoned since 2002 on murder charges and sentenced to five life sentences plus an additional 40 years for his role in the second intifada, the 67-year-old had not been seen in many years.

Marwan Barghouti during his murder trial in 2002. File pic: AP
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Marwan Barghouti during his murder trial in 2002. File pic: AP

The sight of this drawn, diminished figure will shock many across the Arab world, where he is both hugely popular and considered a potential Palestinian unity leader, were Israel to ever release him.

Barghouti’s face, his hands cuffed above his head, stares out from walls and buildings across the West Bank – a potent symbol of Palestinian suffering and resistance in the face of the Israeli occupation.

His more than two-decade imprisonment leaves him untarnished from the charges of corruption and ineffectiveness levelled at the Palestinian leadership, and opinion polls before 7 October 2023 saw his popularity exceed that of both Ismail Haniyeh, head of Hamas’ political wing, and Palestinian Authority President Mahmoud Abbas.

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Palestinians walk by a portrait of jailed Marwan Barghouti near the West Bank city of Ramallah. File pic: AP
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Palestinians walk by a portrait of jailed Marwan Barghouti near the West Bank city of Ramallah. File pic: AP

In a statement, the Palestinian Authority condemned Ben-Gvir’s visit as an “unprecedented provocation and organised state terrorism”.

It is also a clear abuse of Ben-Gvir’s authority as national security minister, where he has ultimate oversight over Israel’s prison system and therefore direct access to the record number of Palestinian detainees currently imprisoned there.

Barghouti’s family say he has been held in solitary confinement since the 7 October attacks and has been subjected to brutal assaults, one of which left him severely injured.

Israeli mistreatment

Barghouti will be no stranger to Israeli mistreatment.

In an op-ed from jail to the New York Times in 2017, he detailed the first time he was tortured at the age of just 18, when an Israeli interrogator “forced me to spread my legs while I stood naked in the interrogation room, before hitting my genitals”.

He passed out from the pain, hitting his head, which scarred permanently. Afterwards, he wrote, the Israeli interrogator mocked him, saying he would “never procreate because people like me give birth only to terrorists and murderers”.

Marwan Barghouti in 2012. File pic: AP
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Marwan Barghouti in 2012. File pic: AP

Barghouti’s release has been a key component of ceasefire negotiations between Israel and Hamas, with talks in February 2024 breaking down when Israel refused to let him go.

Despite international pressure on Israel to ensure the humane treatment of its prisoners, the ICRC has not been granted access to Palestinian prisoners in Israeli detention since the 7 October attacks.

String of provocations

Ben-Gvir and his fellow ultra-nationalist coalition partner, Finance Minister Bezalel Smotrich, both excel at the provocative act.

Less than two weeks ago, Ben-Gvir was filmed visiting the Al-Aqsa mosque in Jerusalem where he said he prayed, which is in direct violation of the status quo agreement governing relations between Muslims and Jews at the key holy sites on Temple Mount.

Itamar Ben-Gvir in Jerusalem's Old City last month. Pic: Reuters
Image:
Itamar Ben-Gvir in Jerusalem’s Old City last month. Pic: Reuters

Bear in mind, it was Ariel Sharon’s visit to Temple Mount in 2000, which launched the second intifada, and you will get a sense of quite how incendiary that was.

Similarly, on Thursday, in what appeared to be a direct response to international calls for recognition of Palestinian statehood, Bezalel Smotrich announced that Israel would start the long-delayed E1 settlement project between the West Bank and East Jerusalem.

This, he said, would “bury” any notion of a Palestinian state once and for all.

The video showing the public humiliation of a man championed by the likes of Desmond Tutu and Jimmy Carter as the Palestinian Mandela, was released just hours later.

It looks like an attempt by Benjamin Netanyahu‘s ultra-nationalist allies to send a message both to Palestinians and to international supporters of Palestinian statehood that a state, and its potential leadership, is nothing but a pipe-dream.

A protester in the West Bank holds a poster depicting Barghouti during a rally in solidarity with Gaza and prisoners held by Israel. Pic: AP
Image:
A protester in the West Bank holds a poster depicting Barghouti during a rally in solidarity with Gaza and prisoners held by Israel. Pic: AP

‘Still pursuing’ Barghouti in prison

In 2013, Barghouti’s wife, Fadwa, launched a campaign for his release and that of all Palestinian prisoners from Robben Island, where Mandela was imprisoned, to draw attention to the similarities between South Africa during the apartheid era and the plight of Palestinians under Israeli occupation.

After the release of this latest video, she wrote on her Facebook page that she barely recognised her husband and was scared to imagine what he had been subjected to.

Read more from Sky News:
Inside the conflict forcing Palestinians from their homes
The city where what was law now has no place in reality

But her words were also a rallying cry.

“They are still pursuing you, Marwan, and chasing you even in the solitary cell where you’ve been living for two years,” she wrote.

“I know that nothing shakes you except what you hear about the pain of your people, and nothing defeats or pains you except the lack of protection for our sons and daughters. You are one of the people: wherever you are, you are among them, for them, with them.”

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