The draft budget prepared by the Ministry of Finance provides for a deficit for the next three years, while the deficit should be gradually reduced from 2% of GDP in 2023 to 0.7% in 2025, head of the department Anton Siluanov said at a government meeting on September 22. Russia will be able to ensure compliance with these budget parameters only if the tax burden on the fuel and energy sector increases, he said. If we do not take into account the planned revenues to the budget from the oil and gas industry, then the budget deficit, according to the Ministry of Finance, will decrease from 7.9% in 2023 to 5.7% in 2025
“The tax proposals take into account the fair withdrawal of part of the natural rent, which has increased as a result of changes in the global commodity price environment,” Siluanov said.
The Minister did not disclose the expected rates of export duties and the planned timing of their introduction. Duties on the export of thermal coal and fertilizers could be introduced "if prices for these products remain high," he said.
In the oil industry, in addition to increasing the severance tax rate, the Ministry of Finance proposes to maintain the existing parameters of the damper mechanism in the oil market. The damper mechanism is used to stimulate the supply of petroleum products to the domestic market in a situation of high demand for them abroad. But this year, the government has adjusted the formula for calculating the damper for gasoline, as a result of which the subsidy that the state provides to refiners for supplying this fuel to the domestic market has decreased. In the summer, market participants hoped that the reduced damper for gasoline would only be valid until the end of 2022.
The intentions of the Ministry of Finance to change taxation are not limited to the measures listed above: according to Siluanov, "a number of other tax innovations are also envisaged." After the government considers the proposals of the Ministry of Finance, the draft budget for 2023-2025. should be sent to the State Duma.
The current tax legislation provides for the abolition of duties on oil exports from 2024. This is happening as part of the so-called "tax maneuver" that has been implemented in the industry since 2019.
The idea of establishing export duties on LNG, coal and mineral fertilizers has been discussed in the government for several years, but so far no such changes have been made to the legislation.
