Evgeny Bushmin, chairman of the Federation Council's budget committee
Photo: Dmitry Azarov
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Oil Fields Are no Pasture for Reindeers, Federation Council Says
Russia’s Federation Council addressed Prime Minister Mikhail Fradkov yesterday, advocating the increase in land tax imposed on the fields and deposits of oil/gas/mining companies. The regions claim today’s system of cadastral valuation underestimates the value of such allotments leaving the local budgets with no money.
Under the Land Tax Code, the tax rates are calculated as percentage of cadastral value of the area. The Code sets forth only the ceiling rates, specifying 0.3 percent for farming area, household plots and housing land and 1.5 percent for remaining allotments. This tax is the local one, therefore, its final rates are generally determined by municipal authorities within the set limits. As the cadastral valuation has not neared its end yet for the whole Russia, the new Code comes into effect only starting from 2006. In 2005, however, it could be voluntary followed by the regions, the worth of which land has been determined to-date.
In view of revised taxation, cadastral evaluation is the obvious priority. The land price is generally fixed by the government, to be more exact, by the Federal Agency of Real Estate Cadastre. The regions didn’t hail a new method even a year and a half ago, apparently disliking inability to challenge the price fixed by the agency. The issue was raised again yesterday but the other way round. The Federation Council proposed to Fradkov to amend calculation procedures for allotments granted to the oil/gas and mining enterprises for extraction purposes. Now the tax rates for such area are determined with regard to the minimum value due to shortcomings of the calculation procedures, the Federation Council said.
A distant northern territory is now appraised as an adjacent territory with no practical value, “roughly speaking, for instance, like reindeer grassland in tundra,” Evgeny Bushmin, chairman of the Federation Council's budget committee, told Kommersant. “Such plots are not the pasture, they yield crude,” the official shed light on the issue.
www.kommersant.com
All the Article in Russian as of June 23, 2005
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