Revenue extraction: how tougher taxes for oil workers will increase the state treasury

Marcel Salikhov, President of the Institute for Energy and Finance and Sergey Kondratiev, Principal Director on Economic Studies, commented to Forbes on the oil and gas revenues of the Russian budget.

The government is discussing a bill with amendments to the rules of the oil industry taxation. The Ministry of Finance expects that it will be submitted to the State Duma in July.

The budget will save about 700-800 billion rubles a year as a result of reducing the damper, Salikhov believes.

"In June, payments amounted to 138 billion rubles, of which 90 billion rubles were for diesel fuel. Reducing payments by half will save 65-70 billion rubles a month at current oil prices — higher prices and a weaker ruble increase payments on the damper," the economist explained.

The Ministry of Finance also decided to postpone from 2024 to 2027 the introduction of a 20% deduction for mineral extraction tax for mature fields in Western Siberia, which belong to the third group of mineral extraction tax. "Lukoil and Tatneft sought an increased deduction for mineral extraction tax," Sergei Kondratiev notes. — The transfer of benefits will help the budget to save about 250 billion rubles a year."

The third key change is to accelerate the increase in excise taxes on gasoline and diesel fuel to 5% annually until 2026. Now excise taxes are indexed by 4% per year. "This will allow us to receive about 15-17 billion rubles of additional budget revenues annually," Salikhov estimated.

"Constant changes and adjustments to conditions create uncertainty," the expert emphasizes. "Investment projects in the oil and gas industry have long payback periods, while it is impossible to be sure that tax conditions will remain unchanged."

Another problem is the nervous conditions in the industry due to the point nature of various measures and benefits. "Often the wording of tax benefits themselves — specific regions, coordinates, etc. create different tax conditions for similar projects, but different companies," Salikhov notes.

"It is possible that the Ministry of Finance will return to the issue of taxation of oil workers already in 2024 in the event of a high budget deficit and the level of oil and gas revenues below expectations," Kondratiev admits.