Page 43 - RusRPTJune18

6.0 Public Sector 6.1 Budget
Russia’s 2018 budget surplus may amount to RUB440.6bn ($7.1bn), instead of previously expected deficit of RUB1.27 trillion ($20.5bn) , the government said on May 10.
That is a surplus of 0.45% of GDP this year instead of previously expected deficit of 1.3% of GDP, according to this year’s amended draft federal budget for 2018, Tass reports.
The ministry also revised its estimated Russian budget revenues for 2018, from RUB15.157 trillion to RUB17.032 trillion.
The amended budget also increases projected additional oil and gas revenues nearly fivefold, to RUB2.74 trillion from the previously estimated RUB527.6bn. Average oil prices this year have been over $60 per battle each month and topped a four-year high of $77 on May 10.
Starting in 2018 additional oil and gas revenues received from the price of Urals crude oil above the base of $40 per barrel in 2017 prices, will be allocated on reserves instead of expenditures. The base price will be adjusted by 2% annually starting 2018.
6.1.1 Budget dynamics - specific issues...
The Russian tax burden is rising despite claims to the opposite from MinFin . Contrary to statements by the Ministry of Finance, the tax burden on the Russian economy grew last year. According to the Federal Tax Service, the main burden was assumed by the extractive sector, while food production and IT were also hit by sizable increases. The tax burden on the mineral extraction sector rose almost 10%age points last year from 35.6% in 2016 to 45.4%. (The FTS calculates tax burden as a ratio of the amount of taxes paid to the revenue received.) Raiffeisenbank analyst Andrei Polishchuk says, however, that the increase is not significant for oil and gas companies. He attributes the change to rising oil prices: the higher the price of a barrel, the greater the mineral extraction tax. And because the price of oil is high and the ruble is cheap, oil companies “feel great.” The federal budget also ‘feels great’ about the increased taxes. In 2017, the extractive sector provided 27.4% of the consolidated budget's fiscal revenues. Of last year's total increase in tax revenues (RUB 2.8 tn, $45.4bn), more than 40% was due to an increase in taxes on mineral extraction. The two other sectors hit hardest by increasing taxes were the food sector (which increased to 28.2% against 19.7% in 2016, experiencing its highest level since 2006) and IT (which increased from 12.6% to 16.4%). Overall, the tax burden on Russian companies increased to 10.8% in 2017, against 9.6% a year earlier. Finance Minister Anton Siluanov has repeatedly stated that the tax burden on the economy will not grow in the coming years. Just in March, he announced that the introduction of new technologies and other measures to rejuvenate the economy enabled a boost in budget revenues without an increase in the tax burden. Contrary to his statements, VAT collection, profit taxes, excise and insurance fees all
43 RUSSIA Country Report June 2018 www.intellinews.com