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Russian Duma To Vote On 2010 Budget

by Tatiana Smolenskaya, Tax-News.com, Moscow

30 September 2009

Russia's budget for 2010, which is ready for approval by the Duma this week, will include tax increases on beer, petrol, cigarettes, cars and stamp duty. This should bring in an extra RUB140bn (USD4.7bn) of tax revenue, compared with the forecast total budget deficit of RUB2.9 trillion, or 6.8% of gross domestic product. The deficit will be financed by a combination of domestic and foreign debt, transfers from sovereign wealth funds and some privatization proceeds.

As the World's second largest exporter of oil, Russian finances have taken a severe hit from weak oil prices, but the budget plans for 2011-2012 do not assume major increases in oil prices over the next three years - base price assumptions for Siberian Urals grade oils are USD58 per barrel for 2010 rising to USD60 by 2012. Oil and gas tax revenues are nevertheless budgeted to increase to 46% of the RUB6.95 trillion total revenues in 2010.

Prime-Tass quoted prime minister Vladimir Putin as saying that budget policy should be focused on ensuring macroeconomic stability and gradually reducing the budget deficit from RUB3.2 trillion expected in 2009 to RUB1.6 trillion in 2012.

If approved, the following tax rises and targets will apply:

  • Higher alcohol duties would generate an extra RUB65bn; in particular, duty on beer would be trebled to RUB9 per litre, but vodka duty would remain unchanged.
  • Petrol, diesel and motor oil duties would rise by 10%, generating an extra RUB14bn;
  • Car taxes, would be increased to yield an additional RUB7.5bn.
  • Tobacco taxation would generate an extra RUB23bn - a 30-50% increase in cigarette duties.
  • Stamp duties on legal transactions would generate an extra RUB31bn.

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