Russia's President Vladimir Putin, 3rd right, First Deputy Prime Minister Sergei Ivanov, 4th right, president's aide Igor Shuvalov, 2nd right, attend the sitting of the RF Chamber of Commerce and Industry, December 11, 2007.
Photo: Dmitry Azarov
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Oil, Gas Producers to Pay Higher Taxes
In the twilight of presidential tenure, Vladimir Putin intends to additionally increase tax burden on producers of crude oil, gas and other raw. Although the primary industries manifest the slowest growth, the president has suggested distributing their so-called fat in favor of the “real sector of economy.”
“We have made the decision to create better conditions for economy’s real sector for the account of oil and production industries. We regard they have some fat and we can redistribute tax burden a bit,” Putin announced in the RF Chamber of Commerce and Industry during the discussion on appropriateness of withdrawing oil and gas revenues to the Stabilization Fund.
The oils benefited from rather advantageous conditions during the first term of Putin’s presidency. The difficulties began in 2004, when the authorities focused on them in the wake of the Yukos case.
On January 1, 2005, the basic rate of severance tax rose from 347 rubles/ton to 419 rubles/ton and the export duties were hiked materially. According to Finance Ministry, then, the matter at stake was additional withdrawal of $3.3 billion a year with the oil prices at $30/bbl. People in the Economic Development Ministry concluded that the industry reached the maximum level of withdrawal – 90 percent of all revenues generated by companies from higher export prices.
The procedures have survived so far. Under Finance Ministry’s estimate, the changes in the world prices for crude oil and significant growth in payments made by oil and gas producers widened the tax burden on economy from 34.7 percent in 2001 to 36.5 percent in 2006.
The oil industry steps up just 1 percent to 2 percent a year today, which is hardly surprising in view of tax burden of this extent. But the recent statement of Putin hardly inspires any optimism in part of potential acceleration.
www.kommersant.com
All the Article in Russian as of Dec. 12, 2007
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