Marcel Salikhov, President of the Institute for Energy and Finance, gave a detailed interview to the Oil and Gas Vertical magazine about changing taxation rules in the context of an economic downturn.
NGV: Let's start by discussing the parameters of the budget for 2023 and the planning period of 24-25 years related to the oil and gas industry. An additional increase in the fiscal burden on the fuel and energy complex will amount to about 2 trillion rubles. In particular, at least 400 billion additional dollars are expected from the oil industry due to the adjustment of payments of the reverse excise tax on oil refining and the introduction of an additional coefficient to the MET rate on oil; from the gas industry - 1.3 trillion rubles through the withdrawal of excess profits from LNG producers and an increase in the rate of export duty and excise tax on pipeline gas with the introduction of a differentiated rate: 30% for gas prices below $300/m3 and 50% for gas prices above $300 $/m3; from the coal industry - up to 90 billion rubles due to the introduction of an export duty on coal and a temporary increase in the MET rate on coal, with the exception of brown coal. Do you think the fuel and energy complex will be able to provide these additional taxes and how hard it will get it? As for the coal industry, they say, even the Ministry of Finance itself had doubts ...
NGV: Do you think that a balance will be found between filling the budget and solving social and economic problems, on the one hand, and maintaining the investment attractiveness of the fuel and energy complex in the new conditions, on the other? If a balance is not found, what consequences can be expected?
- Yes, the Ministry of Finance proposed a rather serious increase in taxation of the raw materials sectors. This is due to two main reasons. Firstly, this is an increase in prices on world markets compared to what was expected before. The energy crisis has led to a serious rise in prices. However, Russian producers are in a less favorable position due to continued discounts on Russian products compared to global benchmarks. Secondly, it is a revision of the expenditure parameters of the federal budget. In particular, last year's federal budget assumed spending for 2023 in the amount of 25.2 trillion rubles. The bill on this year's budget provides for 29 trillion rubles. The revision of the expenditure side is almost 4 trillion rubles. This necessitates an increase in revenue as well. Under these conditions, the government decided to increase taxes on the primary sectors in the first place, rather than increase the overall level of taxation. However, the risk is that the financial position of companies in these sectors will seriously deteriorate, which will primarily have a negative impact on their investment activity.
NGV: Will there be an automatic reorientation of the economy from oil revenues, or will measures be purposefully taken to support the role of the fuel and energy complex, including by tax policy methods? And is it worth doing so in terms of long-term development?
- Now it is quite difficult to say about it. It is obvious that budget expenditures will grow in the coming years. In principle, there are two options - an increase in the level of public debt or an increase in taxes. For the time being, the government plans to pursue some kind of hybrid strategy - to increase debt, but at the same time increase taxes on the raw sectors of the economy. This, other things being equal, will reduce investment attractiveness. But this is some distant prospect, which is currently not considered a priority.
Read the interview (in pdf)
- Automatic reorientation is probably not expected, this is simply a consequence of decisions on the need for a strong increase in budget expenditures. It is quite possible that if oil and gas revenues are less than planned, then the authorities will also be forced to increase the overall level of taxation in the economy, raising base tax rates.
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