Russian government eyes mining firms as new tax source

Significance

Facing a budget gap formerly filled by oil and gas, the Russian government is proposing new taxes for the mining, oil and tobacco industries. It is considering proposals to triple the mineral extraction tax on metals, fertilisers and high-viscosity oil producers.

Impacts

• The new taxes could bring as much as USD4.5bn a year in additional budget revenues and will relieve pressure to borrow domestically.
• A tax shift is seen as more sustainable to drawing on the sovereign wealth fund, which will be kept for emergencies.
• The government also intends to raise revenues by increasing excise tax on cigarettes by 20% in next year's budget.