If the Russian economy grows at 4 percent in the next 10 years, and the federal budget deficit is maintained at around 3 percent, then by 2020 the state debt will reach 33 percent of GDP as against the current 10 percent.

Supplementary revenues from taxes and non-tax measures taken by the Russian government will result in over RUR 1 trillion of revenue in 2011 – 2013, according to Ilya Trunin, the head of the Tax and Customs Policy Department of the Finance Ministry. 

In 2011 alone, the extra revenue is expected to reach RUR 200 billion. In 2012, the influx of cash into federal coffers from new state service fees and increased government taxation will be RUR 370 billion. Non-tax measures will provide extra income in the amount of RUR 60 billion annually.

The tax for the extraction of natural petroleum resources (oil NRET) is expected to increase by 6.5 percent in 2012. In 2013, the tax will increase by 5.4 percent. The current tax rate for the extraction of oil (oil NRET) has remained at the level of RUR 419 per metric ton for a long time without adjustment. The rise in the oil NRET will help balance out the budgetary shortfall resulting from various NRET discounts and exemptions that have been granted in previous years. In addition, the Russian government is intent on performing a complete differentiation of the NRET to reduce the tax applied to operations at extraction fields where the cost of development is high and to increase the tax at sites where development expenses are comparatively low.  

The oil NRET increase will generate for the state RUR 78.1 billion in 2012. In 2013, the rise in the tax rate will produce another RUR 147 billion.

Addressing the topic of exporting petroleum products from Russia, Mr. Trunin suggested that in 2013 Russia could introduce a single export duty on both light and dark oil products. The Ministry’s agenda now includes ensuring the enactment of a uniform tax set at 60 percent of the duty rate on oil as of January 2013. 

While the average tax rate on light and dark petroleum products for 2011 is expected to stay at the current level of 56 percent, the plan for 2012 is to bring the rates closer together, lowering the rate for light oil products and increasing the rate for dark petroleum products. Thus, the average rate for 2012 will be at 58 percent.

According to Ilya Trunin, the tax rate for the extraction of gas will rise by 61 percent in 201. For the following years, the gas NRET will rise by the projected rate of annual inflation. The increase in the gas NRET has been approved by all government entities that have a say in the law-making process. It is expected that the rate will increase by 6 percent in 2012 and 5.4 percent in 2013. The implementation of these measures will produce combined revenue of RUR 51.2 billion for the state budget in 2011. In 2012, the revenue figure is expected to be RUR 60.4 billion. For 2013, the increase in revenues from the rise of the gas NRET is projected to stand at RUR 69.1 billion.    

Revisions are also expected for excise duties for gasoline. Each year from 2011 to 2013 taxes on 1 liter of gas sold in Russia will rise by RUR 1.00.  The head of the Tax and Customs Policy Department of the Finance Ministry said that his governmental department will make corresponding recommendations to the Russian President and the Cabinet of Ministers for the final decision to be rendered. 

Excise duties on class 3 gasoline will rise from RUR 4 302 to RUR 5 672 per ton. The guiding factor on the basis of which Russian authorities will diversify excise taxes will be the environmental category of the fuel, not the octane number of the particular gasoline type. 

The duty on diesel fuel will be increased by a larger percentage than the duty on gasoline, as the current rate is comparatively low. Increasing excise taxes on gasoline, diesel fuel, motor oil, and airplane fuel will boost federal revenues by at least RUR 80 billion in 2011, RUR 105 billion in 2012, and another RUR 105 billion in 2013.   

Not all new proposals from the Russian Finance Ministry entail raising taxes. The Ministry of Finance is recommending cutting transport taxes by 50 percent in 2011. The Ministry also proposed to the Russian regions to eliminate taxes on 150-horsepower- (or less) vehicles. Car taxes in Russia are levied by the individual regions.

The rationale for lowering taxes on transportation is mitigating the damaging effect of increased gasoline prices on Russian car owners. At the same time, the Ministry understands that the transportation tax is an integral component of regional fiscal autonomy. As a replacement of the loss of revenue from car taxation, the Ministry suggested imposing tolls on high-occupancy and large capacity vehicles for using federal highways. 

Russia’s export duty on copper will reach 10 percent in 2011. The rate increase might even go into effect earlier than the start of the new year.

According to the Ministry of Finance, increasing the export duty on copper to 10 percent will provide for a revenue increase of RUR 8.8 billion in 2011, RUR 7.4 billion in 2012, and RUR 6.5 billion in 2013.

The Russian government also plans to institute a higher export duty on nickel. The new formula, which will tentatively go into effect at the start of 2011, will be based on world prices on nickel. Industry experts say that the tariff could be as high as 30 percent of the difference of the sales contract price and USD 20 000 per metric ton. No duty will be imposed so long as the price stays under USD 12 000. The export tariff will then increase progressively, first to 5 percent and then to 7.5 percent. Increasing the export tariff on nickel will generate for the Russian federal budget RUR 14.4 billion in 2011, RUR 14.3 billion in 2012, and RUR 12.8 billion in 2013.  

For tobacco products, excise duties are set to rise by anywhere from 30 to 40 percent every year from 2011 to 2013. The tax for 1 000 cigarettes will be RUR 280.40 in 2011, RUR 360 in 2012, and RUR 460 in 2013. Cigarettes that do not use filters will be taxed at the rates of RUR 250 per thousand in 2011, RUR 360 in 2012, and RUR 460 in 2013. It is anticipated that the increases in excise duties on cigarettes will net for the Russian federal budget RUR 20.1 billion in extra revenue in 2011, RUR 34.7 billion in 2012, and RUR 49.6 billion in 2013.