Off The Wire
Russia targets tobacco, mining, oil taxes in hunt to plug budget holes
* Russia targets extra tax for miners, tobacco
* Plans to scrap zero extraction tax for high-viscosity oil
* Measures to bring $4.5 bln in fresh funds to budget per year
* Russian budget projected in red over next 3 years (Adds details, quotes, factbox)
By Anastasia Lyrchikova, Polina Devitt and Darya Korsunskaya
MOSCOW, Sept 16 (Reuters) - Russia is considering raising taxes affecting some mining companies, tobacco sales and the oil industry, officials said on Wednesday, in Moscow’s latest attempt to plug holes in its budget.
The move, estimated to bring in around 340 billion roubles ($4.54 billion) a year, comes as Russia faces a prolonged budget deficit amid weak oil prices and after Moscow stepped up its support for Belarus which includes a $1.5 billion loan.
Russia is considering tripling the mineral extraction tax (MET) on metals and fertiliser producers, industry sources told Reuters, and plans to scrap a zero MET on high-viscosity oil from 2021, a draft law seen by Reuters showed.
In addition, Moscow wants to increase the excise tax on cigarettes by 20% next year. Plans were confirmed by the Finance Minister Anton Siluanov later on Wednesday.
“When it is difficult, everyone should be involved in solving the problems which the country and its people are facing,” Prime Minister Mikhail Mishustin told a government meeting on Wednesday.
He described the proposal, yet to be finalised, as “slightly increasing taxes on a number of profitable sectors”. Miners of gold, diamonds and coal are not included in the finance ministry’s proposal for mining, the sources said.
The tax rise under review, which would hit Russia’s top players such as Norilsk Nickel, Rusal, Phosagro, NLMK, Severstal and Evraz, would be introduced from 2021, the sources said.
Tax hikes announced by the finance ministry on Wednesday are seen bringing in a combined 340 billion roubles in additional budget revenues per year, the equivalent of around 12% of the projected budget deficit in 2021.
“These are additional resources for the budget which first of all will be used to finance anti-crisis plans and the fight with (economic consequences of) coronavirus and which require significant funds,” Siluanov told reporters.
FACTBOX with proposed tax changes
Shares across Russian metals and mining companies, as well as of the Russian oil producer Tatneft which is focusing on high-viscosity oil projects, fell on Wednesday on the tax change proposals.
A higher tax would hit Russia’s emerging and state nurtured production of rare earth minerals, the industry ministry said in a letter to the government, a copy of which was obtained by Reuters.
“The finance ministry, facing the budget deficit, is looking for sources to increase the budget revenues. This is a perfectly normal process,” Kremlin spokesman Dmitry Peskov told reporters on Wednesday, adding that the final decision was yet to be made.
($1 = 74.8875 roubles)
Reporting by Anastasia Lyrchikova, Polina Devitt and Darya Korsunskaya; additional reporting by Andrey Ostroukh, Gabrielle Tétrault-Farber, Alexander Marrow and Vladimir Soldatkin Writing by Polina Devitt; Editing by Katya Golubkova and Chizu Nomiyama