MOSCOW (Reuters) - Russia will collect up to $10 billion more in revenue from oil companies this year because of the way they are taxed, a deputy finance minister told Reuters, money that with borrowing and the national wealth fund will help finance a post-pandemic recovery.
The Russian economy is forecast to shrink by up to 6% this year, its sharpest contraction in a decade, as a result of lockdowns to halt the spread of coronavirus and a plunge in prices for oil, the country’s main export.
A government plan to jump-start activity aims to spend 5 trillion roubles ($71 billion) by the end of 2021.
Deputy finance minister Alexei Sazanov said low oil prices alone would wipe 2 trillion roubles from the budget this year. His ministry is raising more debt and using the National Wealth Fund (NWF) to meet increased spending commitments.
But a mechanism that keeps domestic fuel prices broadly stable, with the government paying subsidies when oil is high and clawing back the difference from producers when crude is cheap, should provide additional support.
With oil at $30-$40 per barrel the budget will get up to 700 billion roubles more this year under the system, known as tax manoeuvre, Sazanov said, or 3 trillion roubles in five years.
“When the budget especially needs cash to meet its obligations ... this works well. Under no circumstances we are going to abandon or revise it,” he said in an interview.
Oil companies also pay mineral extraction tax and export duties.
Coupled with higher borrowing and spending from the NWF, that means there is no need for wider tax rises, Sazanov said.
Separately, the ministry is testing a tax for some oil fields based on profits that would replace other taxes and which aims to boost oil output.
But that system cost the budget 213 billion roubles last year, and Sazanov said it was not the time to apply it widely.
“Rolling out the profit-based tax on the wider sector (for budget) is equal to oil prices falling to $25 per barrel,” he said. “The budget will dry out in ... 5-7 years at best.”
Reporting by Darya Korsunskaya and Olesya Astakhova; Writing by Katya Golubkova; Editing by Catherine Evans