In Russia, big business was asked to fork out for the budget: experts drew parallels

In which countries did the authorities act in a similar way?

The initiative of the First Deputy Prime Minister of the Russian Federation Andrei Belousov, who at the beginning of February offered large companies to make a one-time contribution to the federal budget to compensate for its deficit, found wide support among the “powerful ones”, but was transformed. Finance Minister Anton Siluanov said on February 17 that the government expects to replenish the state treasury through tax tools. It will be applied to some companies, with the exception of the oil and gas sector and small businesses. Kremlin spokesman Dmitry Peskov called the proposal a common global practice and supported the initiative. Experts told MK about in which other countries such measures were used and whether their experience is suitable for Russia.

The government began searching for additional sources of income not by chance. The federal budget deficit in 2022 reached 3.3 trillion rubles. This figure has become one of the largest in the history of modern Russia. The biggest “hole” in the state treasury was only at the height of the pandemic in 2020 – 4 trillion rubles. According to the preliminary estimate of the Ministry of Finance, in 2023 the deficit could be about 3 trillion rubles. The Office of Anton Siluanov expects to keep the budget deficit at 2% of GDP. But whether this will succeed is a big question, since the figure for January already exceeds 1.7 trillion rubles.

Under such conditions, Andrei Belousov’s proposal naturally began to be widely discussed in political and business circles. The First Deputy Prime Minister himself noted that this is not about raising taxes, but about the so-called payment in the “windfall tax” format (which in Russian should be translated as a tax on windfall profits). The Kremlin has a positive attitude towards the initiative. Such a conclusion can be drawn from a statement on this subject by the press secretary of the head of state, Dmitry Peskov, who called the government’s idea of ​​a voluntary contribution of business to the budget a common world practice that was used “in various countries.” And although his comment emphasized that the collection would be “voluntary”, it should be remembered that “in general, the interaction between business and the state is a two-way road.” “It is necessary that both sides are aware of the needs of the country and the realities in which we live,” Peskov explained.

Indeed, there have already been many examples of similar fees in history. Most of them relate to the period when large states became participants in military conflicts. According to Dmitry Ryakhovsky, Head of the Department of Taxes and Tax Administration at the Financial University under the Government of the Russian Federation, taxes on excess profits have been used in world practice for a long time. For example, in Great Britain for industrialists in the First World War, in the USA with a rate of 80% in the Second World War, and in the Korean War of 1950-1953, a tax of 82% was also established there, which provided a third of the tax revenues of the American budget. At the same time, there are “peaceful examples” of a similar fee: for example, the EU currently uses additional taxation for electricity generating companies. “But the most famous example of the successful application of such a windfall tax, which was immediately called “a voluntary contribution of business to the budget”, is the example of Great Britain in the 90s of the XX century,” says Natalia Milchakova, Leading Analyst at Freedom Finance Global. – The Labor government, led by Prime Minister Tony Blair, in the mid-90s was struggling with the effects of inflation and the economic crisis of the 80s, which the previous Tory government could not cope with. As one of the anti-crisis steps, Blair invited big business to donate once “voluntarily” to the state treasury, and the business agreed.” However, such an offer was not made to all large corporations, but only to those that became non-state in the 80s and early 90s, thanks to the large-scale privatization of state-owned enterprises, which was carried out by the Tory government. After privatization, these companies began to receive super profits, which were not there before. So imposing them with a one-time tax looked fair enough. Recall that the Blair government managed to overcome the consequences of the crisis. And the European Union tried to introduce a “voluntary” windfall tax on all large corporations during the coronavirus pandemic, but not all of them reacted to the proposal of the European Commission with understanding, the expert recalled.

If we return to the realities of Russia, it should be noted that business representatives themselves are not enthusiastic about such initiatives. Thus, the head of the Russian Union of Industrialists and Entrepreneurs (RSPP), Alexander Shokhin, noted that companies discussed this idea with the Cabinet of Ministers for about two months and came to the conclusion that it was unrealizable. As an alternative, business offered to raise income tax by 0.5% or launch a new type of government bonds tied to the budget deficit situation. However, this idea was no longer to the liking of the government, but the Ministry of Finance also decided to abandon the idea of ​​a “voluntary contribution”. As a result, we settled on the fact that an additional fee from large businesses from the profits from the favorable situation in recent periods will be implemented through tax tools. “We agreed that special amendments to the tax legislation will be prepared, and most likely, this participation will be in the form of fees from businesses from a part of the increase in financial results in recent years,” Anton Siluanov said. The Ministry of Finance has already calculated that if the initiative is implemented, it will be possible to obtain additional revenues of 300 billion rubles.

However, even among the expert community there are very critical assessments of such an initiative. “It is enough to look at the statistics to see that Russian business does not have any “crazy” profits today, so this is a bad idea,” says Alexander Razuvaev, a member of the Supervisory Board of the Guild of Financial Analysts and Risk Managers. – Why, if you need money, then they immediately want to take it away from the business? This reminds me of Byzantium before its fall in 1453. As a result, the Greek business was so fed up with its extortions that it was not opposed to the Turks taking Constantinople, which became Istanbul as a result of the conquest. And the thing is that the sultan really encouraged business: his tax rates were softer and developed the economy better than in Byzantium.”

Another question: is it possible to correctly identify those companies that receive excess profits and what changes should be made to the Tax Code? “Currently, digitalization in tax administration is at a high level, which makes it possible to single out the relevant industries with surgical precision,” Dmitry Ryakhovsky explained. distortions in the economy and is the implementation of the regulatory function of taxes. The Tax Code can be amended in terms of establishing new rates for income from certain types of activities, and this, in fact, will be enough, since the rest of the tools are already there, the expert noted.