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Maria Levitov
Bloomberg
Russia will retain tax breaks in 2011 for producers developing new oil and gas deposits that require large capital outlays, though an extraction tax increase will go ahead, Prime Minister Vladimir Putin said.
Tax increases are necessary for the government to meet its spending plans, including a 9 percent rise in pensions next year, Putin said during a government meeting in Moscow on Wednesday, July 28.
While the government must have sufficient funds, “we don’t have the right to get excessively carried away with borrowing,” Putin said. “We also don’t think it wise to raise taxes across the board.”
Russia may boost oil and gas extraction levies and tax copper and nickel exports to narrow the budget gap. The Finance Ministry proposed a 61 percent increase in the gas extraction tax next year, a 6 percent increase in 2012 and a 5.4 percent in 2013. The oil extraction tax may rise to 6.5 percent in 2012 and 5.4 percent in 2013, according to the proposal. The tax changes must still be formally approved by the government.
Putin reiterated his estimate of a budget shortfall this year of less than 5 percent of gross domestic product, down from 5.9 percent in 2009, as the world’s biggest energy exporter recovers from last year’s record 7.9 percent contraction.
Borrowing Plans
The shortfall is set to narrow to 3.6 percent of GDP next year, 2.4 percent in 2012 and 1.5 percent in 2013, Deputy Finance Minister Sergei Storchak said last month.
Russia plans to borrow 1.5 trillion rubles next year, 1.3 trillion rubles in 2012 and 931 billion rubles in 2013, Storchak said, citing preliminary estimates in the government’s borrowing program. The country will meet 90 percent of its borrowing needs on the domestic market, he said.
The Economy Ministry is set to raise this year’s economic growth forecast from the current 4 percent, Deputy Economy Minister Andrei Klepach said yesterday. The economy expanded an annual 5.4 percent in the three months through June, Klepach said. That compares with 2.9 percent growth in the first quarter, according to the Federal Statistics Service.
All news from
29 July 2010:
Current Affairs
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