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Vladimir Putin has signed a new law in Russia that represents the biggest restructuring of the Russian tax system in a quarter of a century.

As the war in Ukraine empties the Kremlin’s coffers, the government is looking for new ways to finance it.

The answer is a new progressive income tax rate and an increase in the corporate tax rate.

“It seems that tax reform is a tool to move the economy from butter to weapons,” Alexander Kolyandr, a nonresident senior fellow at the Centre for European Policy Analysis, said last month.

“The government no longer cares about you eating well; it cares about you producing more weapons.”

The new bill, passed by both houses of parliament this week, represents a dramatic departure from Putin’s previous tax policy.

Shortly after taking office in 2001, the Russian president introduced a uniform tax rate of 13% that applied universally. Most Russians have paid the same rate ever since.

The new law maintains a tax rate of 13 percent on income up to 2.4 million rubles (about 20,800 pounds) per year.

Income above this amount would be subject to a steadily higher tax rate.

Income between five and 20 million rubles (around 43,500 to 174,000 pounds) is taxed at 18 percent, income between 20 and 50 million rubles (around 174,000 to 434,000 pounds) at 20 percent, and anything over 50 million rubles at 22 percent.

Putin has said the increases would affect no more than 3.2 percent of Russian taxpayers.

In addition, the corporate tax will be increased from 20% to 25%.

The changes will come into force next year and are expected to generate additional federal revenue of 2.6 trillion rubles (£22.5 billion) in 2025.

The Kremlin hopes that the tax reform will not only help finance Russia’s ongoing war in Ukraine, but also make the country less dependent on oil export revenues in the face of ongoing Western sanctions.