Putin Calls For Higher Tax On Oil Industry Profits

by Tatiana Smolenska, Tax-News.com, Moscow

22 December 2003

Russian President Vladimir Putin has suggested that taxes on oil profits may need to rise in order to help balance the country’s economic growth.

Whilst addressing the nation in his now traditional annual televised phone-in debate with the Russian public, Putin explained that oil and gas firms have made large profits in recent years thanks to high prices in the international markets, and suggested that these excess profits should be taxed at something like 80%, as is the case in many other industrialized nations. Under current arrangements, excess profits are taxed at nearer 50%.

"We have to stop the stealing of national resources and bring order to how they are used," observed the President, adding that the royalties on oil firms should be differentiated according to production levels.

However, Putin acknowledged the economic sensitivity of the oil and gas sector, using the analogy of “the goose that lays the golden egg.”

“Killing that goose would not be very sensible. It would be stupid and impermissible,” he warned.

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