Translated material
...And so six times
The Ministry of Finance proposes to increase the mineral extraction tax on gas
Minister of Economic Development German Gref confirmed that the mineral extraction tax (MET) in the gas sector may be increased from 2008. According to him, “the discussion is at an active stage,” but “no decision has been made yet.” As Vremya Novostey learned, the “negotiating” position of the Ministry of Finance on this issue has developed into a long-term concept. Alexei Kudrin's department proposes to index the tax rate six times by 2011. By that time, according to the decision taken by the government, domestic gas prices should increase by at least 2.5 times and be tied to European prices minus transport and customs duties. Proponents of the rate increase motivate it not only by the emergence of excess profits for gas workers due to price liberalization, but also by the need to reduce the tax burden on industry by reducing VAT.Currently, for every thousand cubic meters of natural gas produced in Russia, the company pays 147 rubles, or approximately 11% of the average wholesale price for gas on the domestic market. The target price in 2011, according to the approved calculations of the Cabinet of Ministers, will be $125 per thousand cubic meters. Thus, a sixfold increase in the rate (approximately 900 rubles) will mean that the share of the mineral extraction tax will increase to 27% of the price on the domestic market. And it will allow the budget to collect an additional 520 billion rubles. with production of 710 billion cubic meters in 2010.
The discussion participants have so far refrained from making official assessments of the future increase. At the same time, the logic of the Ministry of Finance is obviously as follows. Firstly, thanks to the government’s decision, gas workers will begin to receive excess profits from supplies to the domestic market and, therefore, are obliged to “share” with the budget. Therefore, a proportional increase in the rate by 2.5 times is justified and fair. Secondly, the country's leadership is faced with the task of reducing the tax burden on the country's economy, which will be under the harsh pressure of the new gas reality.
The government is faced with an extremely non-trivial task that must be solved in a short time, namely within the framework of preparing a three-year budget. As RIA Novosti reports, citing a source in one of the relevant departments, the possibility of linking the mineral extraction tax rate on gas to European prices is being discussed, but with mandatory differentiation of the tax depending on the quality of the gas and the cost of its production. “There is no clear position yet. Most likely, we need to talk about increasing and differentiating the tax,” the official said. -- Specific values will be announced. As soon as the government is determined in principle, we will start counting.” The Ministry of Finance told RIA Novosti that linking the mineral extraction tax on gas to world prices is only one of the options. “It’s not a fact that this will be exactly the case; there are other possibilities for increase,” they noted, refusing to voice the Ministry of Finance’s point of view on this matter.
Obviously, we can talk about linking the gas mineral extraction tax to the dynamics of export prices only from 2011, when domestic prices will be calculated from them. Until this point, this approach will clearly discriminate against independent gas producers, since they are legally deprived of the right to export gas and profit from high prices in Europe. Accordingly, now we can talk about a different principle of indexation, which, apparently, will depend on the confrontation between the Ministry of Finance and the Gazprom lobby in the government.