The ministries opposed Belousov's idea of ​​confiscating excess income

At least three of the five relevant ministries - the Ministry of Economic Development, the Ministry of Industry and Trade and the Ministry of Natural Resources - gave negative opinions on the initiative of Vladimir Putin’s assistant Andrei Belousov to seize excess profits of more than 500 billion rubles from 14 metallurgical and chemical companies, RBC writes , citing sources in the departments. The head of the Ministry of Finance and First Deputy Prime Minister Anton Siluanov previously spoke about the proposal with skepticism.

Details

• Deputy Prime Minister Maxim Akimov instructed five ministries, including the Ministry of Energy and the Ministry of Finance (RBC did not familiarize themselves with their position), to submit their proposals on the initiative by Friday, August 17. By Thursday evening, the four departments should send their positions to the Ministry of Finance, which will prepare a consolidated report for the government. RBC sources say that the Ministry of Economic Development, the Ministry of Natural Resources and the Ministry of Industry and Trade wrote negative reviews; one of the publication’s interlocutors claims that all five ministries gave a negative assessment.
• Only RBC's source in the Ministry of Industry and Trade explained the department's position in detail. According to him, the ministry sees negative consequences from Belousov’s idea - we are talking about a reduction in companies’ investment programs, staff reductions, partial loss of foreign markets, further loss of taxes to the state and a decrease in GDP in the affected industries. In addition, the affected companies in the future will not be able to comply with the May decree of the president, which includes, among other things, increasing labor productivity and increasing non-resource, non-energy exports (it is planned to use the confiscated excess income to finance the May decree). The ministry also called Belousov’s most proposed idea of ​​comparing companies in different industries based on EBITDA incorrect.
• A source in the Ministry of Finance told RBC that the ministry is also preparing a letter with negative feedback. The department believes that the proposed measure will negatively affect the investment climate and undermine the principle of stability and predictability of fiscal conditions, he added.
• Belousov himself, as RBC found out , invited the heads of companies from whom he wants to seize windfall profits to a meeting on August 24. At the meeting, the presidential aide plans to explain his position, hear the companies' arguments and alternative proposals in order to “come to a compromise.”

Context

• Belousov’s idea, along with business, was also opposed by the Russian Union of Industrialists and Entrepreneurs, which estimated business losses at 4 trillion rubles (10% of the capitalization of the Russian stock market). Fitch noted that effective tax increases for 14 companies would impact their profitability, reduce available cash flows and capital investment, and force dividend cuts.
• “It would be advisable to create a mechanism that would allow extracting from commodity exporters part of the additional income that they receive from the weakening of the ruble - that is, changes in macroeconomic factors beyond their control - and rising world prices for their products,” Belousov explained his position in an interview with Vedomosti. . “We need to share,” the official summed up.
• Putin put the resolution “agree” on the document, but later Dmitry Peskov explained that the president had only approved the development of the idea in the government.

What's in it for me?

One of the most remarkable passages in the ministries’ responses is an appeal to the vicious circle of Putin’s May decree: if you take away the money needed to implement the decree from companies, you will not be able to implement the decree in terms of increasing productivity. This is not the first such controversy associated with the May decree. For example, as we have already noted , it requires ensuring the growth of the Russian economy by at least 3% per year, but its implementation in turn requires an increase in VAT, which will inevitably slow down GDP growth. An attempt to implement an ambitious and comprehensive program for economic development in the context of sanctions and restrictions on external financing will most likely lead to the emergence of contradictions that give officials wide scope for administrative maneuver.

Artem Gubenko