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Russia may boost oil and gas extraction levies and tax copper and nickel exports to narrow a budget gap in the next three years, cutting companies’ ability to invest in long-term projects.
The Finance Ministry is proposing a 61 percent increase in the gas extraction tax next year, a 6 percent increase in 2012 and 5.4 percent in 2013, Ilya Trunin, the ministry’s head of tax and customs, told reporters in Moscow today.
The ministry is also seeking to raise the oil extraction tax 6.5 percent in 2012 and 5.4 percent in 2013, as well as to unify the oil-product export duty, he said.
Russia’s budget may earn more than 1 trillion rubles ($32.8 billion) from 2011 through 2013, mostly by raising taxes on natural resources, according to Trunin. Russia, the world’s largest energy exporter, had a deficit of 5.9 percent of gross domestic product last year, the first shortfall in a decade, after the economy contracted a record 7.9 percent.
The budget may gain 200 billion rubles next year, 370 billion rubles in 2012 and 500 billion rubles in 2013, Trunin said. Increasing oil and gas taxes may generate the equivalent of 0.5 percent of GDP a year, Finance Minister Alexei Kudrin said June 29.
State-run OAO Gazprom, the country’s biggest taxpayer, faces the first increase in the gas extraction tax in more than five years, which could hurt the company’s ability to generate funds for investment projects, Andrew Neff, an analyst at IHS Global Insight, said yesterday in a note.
“Gazprom will surely object to an increase in the gas extraction tax,” Neff said. “The government seems likely to press ahead, emphasizing the economic benefits to the state over the costs to the state-run gas firm.”
Gazprom defeated similar proposals on the tax increase last year. The board discussed the tax at a meeting yesterday, the company said in a statement. The press office declined to comment on tax changes or the impact on projects. Gazprom is due to consider its 2011 investment program in August.
The finance and other ministries have agreed on the gas extraction tax increase and expect the government to discuss it and the other proposals next week, Trunin said.
Russia may also set a 10 percent duty on copper and tax nickel exports depending on global prices for the metal, starting next year or possibly earlier, Trunin said.
Nickel exports won’t be taxed when the metal trades below $12,000 a ton, and will range between 5 percent and 7.5 percent when it costs between $12,000 and $20,000 a ton under the Finance Ministry’s proposals, he said. The duty will rise to 30 percent of the difference between the market price and $20,000 a ton when nickel trades above that level.
Russia reinstated a 5 percent tax on nickel in January after halting it for 11 months to aid producers including OAO GMK Norilsk Nickel. Copper exports are not taxed.
Russia, which is seeking to boost domestic production of quality gasoline, may unify the export duty on light and heavy oil products by 2013, Trunin said. Russia mainly exports lower- quality fuel oil for further processing at European refineries.
The ministry proposes a gradual approach, decreasing the duty on light products and increasing it for heavy products, to reach a unified tax of 60 percent of the crude export duty by Jan. 1, 2013, Trunin said. The taxes will average 56 percent of the crude export duty next year and 58 percent in 2012, he said.
The excise tax on oil products may increase by 1 ruble a liter each year to 2013, he said.
The tobacco excise tax may also be raised by 30 percent to 40 percent a year through 2013, Trunin said.
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