UPDATE 2-Too early to hike gas taxes - Russia EconMin
(Adds more quotes, details)
MOSCOW, Dec 20 (Reuters) - Russia should not raise the mineral extraction tax on natural gas, Economy Minister Elvira Nabiullina said on Thursday, in comments that point to Gazprom (GAZP.MM) continuing to pay lower taxes than oil firms.
"I don't think we are ready to raise mineral extraction tax on gas," Nabiullina told reporters. The fixed tax currently amounts to 147 roubles ($5.95) per 1,000 cubic metres of natural gas compared to $37.5 per barrel of oil, a level which changes every two months together with oil prices.
The Finance Ministry has been pushing to levy higher gas taxes to channel export revenues into a budget stabilisation fund designed to safeguard the budget and insulate the economy from inflationary money supply growth.
State-controlled Gazprom can expect a revenue windfall next year from a 25 percent hike in domestic gas prices, as well as major price rises to export markets in the former Soviet Union and Europe.
The gas export monopoly continues to enjoy preferential treatment compared to oil firms, which pay as much as 90 cents on the dollar tax on crude exports, thanks to its political clout.
President Vladimir Putin has named Gazprom Chairman Dmitry Medvedev, who is also a first deputy premier, as his preferred successor in a presidential election due to be held on March 2, 2008.
Russia is the world's largest gas producer and exporter, serving one quarter of Europe's gas needs. Gazprom said the tax should stay low so it can save money for its investments in gas production to meet growing demand in Russia and abroad.
TOUGH INFLATION TARGET
Speaking after a cabinet meeting, Nabiullina said it would be tough to hit next year's inflation target of 8.5 percent after a double-digit rise in consumer prices this year.
"We realise this task will be extraordinarily difficult, but this is a task we need to fulfil," she told reporters, adding that fiscal restraint would be vital to curb price growth.
President Vladimir Putin set a controversial agenda for the government this week, asking it to curb spending but at the same time create room for wage hikes in the three-year budget and boost economic growth through development institutions.
Nabiullina said her ministry will calculate inflationary effects of proposed wage hikes and activities of development institutions, which until now have been mostly used to support liquidity levels in the banking sector.
The development institutions, created this year to help diversify the economy from the energy sector, should receive a total of 640 billion roubles ($25.89 billion) of budget funds and Nabiullina said the amount was enough for now. Continued...
