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to 945.6bn rubles ($10.4bn). According to Bloomberg's calculations based on this data, profits from oil and petroleum products, which account for 84% of total hydrocarbon revenues, more than doubled.
Preliminary data from Russia’s finance ministry show that federal budget spending increased by 17 % y-o-y in January-February. Spending seems a bit front-weighted as the budgeted growth in federal spending for all of 2024 is 13 %.
Driven by higher oil & gas earnings, federal budget revenues grew sharply compared to a year earlier. Some of the growth came from changes in the timing of tax payments, but revenue growth was also supported by higher oil prices. Revenues from exports other than oil & gas also increased substantially. The finance ministry attributes some of this gain to last year’s low reference basis and certain one-time payments to the government.
Despite the hefty growth in revenues, the federal budget remained deeply in the red in the first two months of this year. The January-February deficit amounted to approximately 1.5 trillion rubles (0.8 % of GDP according to finance ministry estimates). Under the budget framework, the expected deficit for this year should be roughly 1.6 trillion rubles.
6.1.2 Budget dynamics - specific issues...
Tax revenues to the Russian budget system in 2023 amounted to 46.8 trillion rubles ($514.94 bln), which is 11.3% more than in 2022, according to the press service of the Russian Federal Tax Service.
The federal budget received 19.6 trillion rubles ($215.66 bln), which is an increase of 1.1%, the consolidated budget - 36.2 trillion rubles ($398.24 bln), with an increase of 7.7%.
The growth in corporate income tax revenues in 2023 amounted to more than 24%, VAT - 11%, personal income tax - 14%. Contributions for compulsory social insurance in 2023 increased by 25.7%.
The introduction of a progressive personal income tax (and in fact, an increase in income tax) will only reduce Russia’s GDP, according to an article by economists from RANEPA and IEP, published in the “Financial Journal” of the Research Institute of Financial Sciences of the Ministry of Finance. Kommersant, which presented the findings, notes that the particular value of the study is that it was conducted before Vladimir Putin’s message, after which progressiveness became inevitable.
The main conclusion is that in almost all scenarios, a progressive personal income tax depresses economic growth and most macro indicators. The only positive (but unrealistic) scenario is when the current 13% taxes are the ceiling, not the bottom of the rate.
88 RUSSIA Country Report April 2024 www.intellinews.com