Following the increase of petroleum prices in January and February 2003 the Russian Government has risen export duties on petroleum and mineral oil in April. The duty on exports of crude petroleum will increase from 25.
Following the increase of petroleum prices in January and February 2003 the Russian Government has risen export duties on petroleum and mineral oil in April. The duty on exports of crude petroleum will increase from 25.9 $ per ton ($3.55 a barrel) to 40 $ per ton (5.5 $ a barrel). The increase of export duties on mineral oil (23.3 $ per ton now) will be proportional.
The increase of export duties is not a surprise. But once again it will serve as a reminder for investors that Russian petroleum companies receive very limited benefits from high petroleum prices.
At a price exceeding 25 $ a barrel the Government of the Russian Federation receives 0,40 $ per barrel from each dollar of increased export price. Along with the increase of export prices the government increased the tax for extraction of raw material from 340 rubles (10,8 $) per ton, taking away some more 0,20 $ per barrel from each dollar of the increased price. If the added tax on profit at the rate of 24 % and the high ruble price is taken into consideration, it becomes clear, that Russian companies get only $0,25-$ 0,30 from each dollar of the price increase. Thus, the Government, instead of petroleum companies, receives the basic benefit from increased prices.
According to the head of the Ministry of Finance, the increase of export duties on petroleum will allow receiving additional $500 million for the budget in the nearest 2 months.
The Vice-premier has supported the creation of a stabilizing fund, which "will serve as insurance mechanism for all levels of the budget, when the price for petroleum falls". Alexey Kudrin has cited the data, according to which a price reduction for hydro carbonic raw material on 1 $ for barrel results in a decrease of the gross national product of 0,5 %.
The minister has especially emphasized that it would be unreasonable to direct additional incomes received from the present high petroleum prices to reduce the tax burden.
According to his calculations, a reduction of the petroleum price of more than on 18,5 $ per barrel will already result in indemnifications for the budget from the stabilization fund account. "I?m against using additional income for a reduction of the tax burden", - declared the Vice-premier, having noted that the main sources for a reduction should arise from a decrease in State expenditure, from growth of the economy or from redistribution of the financial burden between raw and processing branches.
Such a redistribution, according to Alexey Kudrin, will allow to lower the uniform social tax to 5 % in 2005 and value-added tax from 20 to 15-17 % in 2006. He also has informed that the Ministry of Finance now considers compensation for VAT on civil works. It is planned that the cabinet will further discuss tax reform during the session, starting March 12.