Russia considers higher taxes after oil and gas revenues fall

Members of the Russian State Duma, the lower chamber of the Russian parliament, are once again discussing scenarios for raising taxes to fill the federal treasury, which has faced a double-digit drop in oil and gas revenues this year.

Source: The Moscow Times, an independent Amsterdam-based news outlet, citing Andrey Makarov, Chairman of the State Duma Budget Committee

Details: There have been proposals to raise taxes for banks and oil companies.

Makarov said both ideas are unviable. Oil companies can no longer pay taxes because they are under sanctions. Banks have also become targets of Western restrictions and their stability depends on the security of the entire economy.

However, Makarov acknowledged that even the updated forecasts for the Russian budget, with a lowered revenue plan, now look "too optimistic".

The Russian Ministry of Finance expects the treasury to collect 8.3 trillion roubles [approx. US$104.6 billion] in oil and gas taxes by the end of the year, which is 2.6 trillion roubles [roughly US$32.8 billion] less than planned. Total revenues will fall short of the original plan by 1.8 trillion roubles (38.5 trillion roubles or nearly US$485 billion instead of 40.3 trillion roubles or approx. US$508 billion), and the deficit will be a record since the COVID-19 pandemic – 3.8 trillion roubles (nearly US$47.9 billion).

The Russian government has already raised taxes on oil and gas, introduced a "tax on overprofits" and exchange rate duties for large businesses in 2022-2024 to fill the military budget, which is breaking Soviet-era records.

Background: Russia earned US$13.2 billion from exports of crude oil and oil products in April, the lowest figure in almost two years.

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