The Ministry of Finance wants to increase state treasury revenues through taxes on the oil industry

According to Krutakov, in reality there is no reduction in revenues to the Russian budget from oil and gas revenues. “On the contrary, there is an increase in the collection of taxes from the Russian oil industry,” the expert believes. “Not oil and gas, but oil.” As rightly stated in the analyzed report of the Accounts Chamber, the price of Urals oil in the period from December 2021 to August 2022 decreased by 32.6% – from $82.9 per barrel to $55.9 per barrel. However, the fun begins next. According to statistics from the Ministry of Finance itself, over the same period, the volume of budget revenues (it would be more correct to talk about the volume of withdrawals from the industry) from the mineral extraction tax (MET) on oil and gas condensate decreased by 25.6% – from almost 7.2 trillion to 5 .4 trillion rubles. However, if in these figures we separate the data on oil from the results on gas, the picture will be completely different.

The Ministry of Finance notes that the volume of collected mineral extraction tax for January-October 2023 for oil amounts to 5.99 trillion rubles. According to the plan for 2023, taxes in the amount of 6.948 trillion rubles should be received from the oil industry to the budget. Expected (based on dynamics) revenues for the year will exceed this plan. Apparently, in 2023 the oil industry will pay 7.903 trillion rubles to the budget, or 114% of the plan. But the situation with gas is different. The volume of mineral extraction tax for the same period amounted to 979 billion rubles, with a planned annual receipt of 1.246 trillion rubles. Expected revenues for the year are 95% of the plan, that is, 1.189 trillion rubles.

The expert recalls that the mineral extraction tax directly depends on the world price of oil – in contrast, for example, to the added income tax (AIT), where this relationship is indirect and is influenced by costs and expenses. “Thus, the load on the oil industry has increased, but not in absolute (abstract) terms, as our Ministry of Finance, the Accounts Chamber and, apparently, those who write about it like to think,” Krutakov concludes from the above calculations. “And in real terms, the growth of taxes per unit of production.” The scientist emphasizes that when the Minister of Finance reports on the results in the process of filling the federal budget, then we are always talking about the achievements of real producers of added value, while department officials do not cut wells in minus 40 degrees in the Far North. “The heroism of the Ministry of Finance employees is manifested in the replacement of numbers in different columns of their plans and reports,” suggests Krutakov.

The expert claims that Anton Siluanov’s department mixes figures for oil and gas together to justify an increase in the tax burden on both industries, but in reality it increases only for oil. According to the Ministry of Finance, the total (including mineral extraction tax, duties on oil and petroleum products, additional income tax and excise duty with damper) tax collection in the oil industry for the period from January to October 2023 amounted to 5.456 trillion rubles. For gas – 1.755 trillion rubles. The plan for the year for oil is 6.238 trillion rubles, and for gas – 3.251 trillion rubles. The plan is expected to be fulfilled (by the same Ministry of Finance) for oil at the level of 6.642 trillion rubles (106%), for gas – 2.158 trillion rubles (66%).

An associate professor at the Financial University under the Government of the Russian Federation points out that even according to the AIT, according to the report of the Accounts Chamber as presented by RBC, 1.297 trillion rubles were collected in January-October, with an annual plan of 1.082 trillion rubles. In other words, in 10 months the increase to the annual plan was already 120%, and it was this tax that was named as one of the reasons for the fall in “oil and gas” revenues.

So why does the Ministry of Finance, and behind it the auditors of the Accounts Chamber, continue to persistently confuse the situation in the oil industry with the gas industry? According to Krutakov, there are several answers here. One of the reasons may be an attempt to hide Gazprom’s failures. The second is to use the results of the gas company to underestimate “pseudo-statistics for the oil industry and force the government and the Duma to increase the burden, again, on the oil industry,” the expert believes.

He draws attention to an interesting detail: both the Ministry of Finance and the Accounts Chamber in their report use the term “hydrocarbons” to confuse the situation in the oil and gas industry. However, the first part of the word refers to coal, which is also a fossil fuel. But the tax burden on the coal industry is 2.7 times lower than on the oil industry (29% and 78%, respectively) and it is not mixed with oil and gas. “By the way, a great idea for the Ministry of Finance,” the expert sneers. — Even lower “total” budget revenues mean even more arguments in favor of increasing the tax burden on oil workers. In the gas industry, the tax burden is also lower – 69%.”

Returning to the “sensational” article in RBC about the fall to a 16-year minimum in oil and gas revenues of the federal budget, which amounted to 28.3% of all revenues, decreasing by almost 15 percentage points (pp) compared to the same period last year, Krutakov claims that this is where it simply begins to be a “mess in our heads.” Despite the fact that all the media carried the news, frightening to the inexperienced public, in reality, manipulation is actually taking place. It is difficult for non-specialists to understand that the “sensation” is not about a general drop of 15% in revenues from the oil industry, but about percentages in relation to last year’s percentage of the total share of tax revenues in the budget. At the same time, the report of the Accounts Chamber notes that in 2022 the price of Urals oil fell by 32.6%.

“Moreover, by oil and gas budget revenues, the Ministry of Finance (and the Accounts Chamber) does not mean all tax collections from oil and gas companies, but only those taxes that directly depend on the price of oil,” explains Krutakov. — In other words, there are other taxes that the Ministry of Finance deliberately does not include in its calculations, but records them in non-oil and gas revenues. These taxes increase the overall burden on the oil industry from 78% to 90%.”

If we collect all the fees paid by the industry, then there is and will not be any “sensation”. According to the expert, if the general reporting takes into account the reverse excise tax on petroleum raw materials, which from January to September amounted to 1.98 trillion rubles. (this amount goes as a damper return to oil workers and is taken into account as a minus in the reports of the Ministry of Finance), then there will be no 16-year record in falling income. At the same time, the RBC article presents the position of a specialist who points to this, but his voice remains unnoticed, because there is no “hot topic” in it. Thus, the director of the ACRA group of sovereign and regional ratings, Dmitry Kulikov, in the publication under discussion directly says that the decline in income in the second half of 2020 was a record one. “But who listens to him when there is such a collapse here,” Krutakov notes ironically.

In his opinion, “in the high offices” of Anton Siluanov’s department should rejoice at the illiteracy of the domestic public (no offense to journalists, auditors of the Accounts Chamber, employees of the Ministry of Finance and State Duma deputies). The goal of such articles is regularly achieved: the load on the oil sector continues to grow under the guise of oil and gas.

As a result, according to the draft federal budget approved by the State Duma, in 2024 oil and gas revenues of the state treasury should increase by 30%, to 11.5 trillion rubles, which is 2.6 trillion rubles higher than expected oil and gas revenues for this year. “At the same time, according to the calculations of the Ministry of Finance itself, more than 1.3 trillion rubles of the total increase is associated not with an increase in production, prices or profitability, but with changes in tax legislation,” Krutakov emphasizes. It turns out that in order to achieve the set goals next year, the tax burden on the oil industry will be a record one: more than 70% of the increase will come from it. “Well, what can I say? Bravo!” sums up the tax policy achievement expert.