Mineral extraction tax (MET) revenues in shares of GDP continued growing
The federal budget revenues in January-April 2015 constituted 21.2% of GDP (Rb 4,548.0bn) which is 0.6 p.p of GDP below their volume for the same period of 2014.
In nominal terms, the federal budget revenues within four months 2015 fell by Rb 206.3bn or by 4.3% from January-April 2014. Reduction was at the expense of the oil and gas revenues: during four months 2015, it fell by 2.1 p.p. GDP down to 9.4% GDP (Rb 2,018.5bn) against the same period 2014 or in absolute terms by Rb 498.1bn which resulted in the increase of non-oil and gas deficit by 3.1 p.p. GDP to 14% GDP.
The federal budget revenue structure for the foreign trade activity posted significant contraction of receipts obtained from export customs duties on crude oil by 44.3% in January-April 2015 from corresponding period 2014 (or by 1.7 p.p. GDP), with total contraction of export customs duty receipts by 37.7%.
MET revenues in shares of GDP continued growing against corresponding period 2014: if within three months 2015 the federal budget revenues proceeded from MET went up by 0.2 p.p. of GDP or by 8.6% from January-March 2014, then for 4 months 2015 growth constituted 0.6 p.p. of GDP or by 10.1% from January-April 2014. MET significance for the federal budget has increased: if in January-April 2014 MET revenues constituted 20.5% in the overall volume of the federal budget revenues, then in January-April 2015, already 23.5%.
One of the reasons for the fall of the federal budget revenues proceeded from export customs duties on crude oil and oil products and an increase in MET revenues is due to the introduction from January 2015 of new approaches to the oil sector taxation and the implementation the so called 'tax manoeuvre' which envisages a reduction of the marginal rate of export customs duty on crude oil (ratio in the formula of the marginal rate calculation) from 59% in 2014 to 30% in 2017 with simultaneous increase of tax on extraction of mineral resources from Rb 493/ton in 2014 up to Rb 919/ton in 2017. According to the Gaidar Institute calculations, within the oil price between $60-100 per barrel, the share of the export customs duty on crude oil will fall from 41-48% in 2014 to 31-36% in 2015, and to 24-27% in 2017, meanwhile MET will perform main functions of tax regulation in the sector.
Within four months 2015, one can declare that:
- There is no compensating effect for the revenue part of the federal budget generated from an increase of the MET rates and reduction of export customs duties; reduction of revenues from the export customs duties on crude oil in January-April 2015 amounted to 1.7 p.p. of GDP, and the MET receipts went up solely by 0.6 p.p. of GDP against the same period of 2014.
- in the wake of the fall of world oil prices and due to specifics of export customs duty calculation on crude oil, oil products and MET, the tax burden of leading Russian oil companies went up. According to the financial statement by Rosneft, within Q1 2015, the share of taxes included in the prime cost of products (including MET) in the overall volume of prime cost went up to 13.39% from 10.2% for Q1 2014.
Tatiana Tishchenko – senior researcher