- The Russian Finance Ministry is considering plans to raise taxes on energy exports, Kommersant reported.
- The tax hike proposals could increase the government’s budget by about $50 billion.
- The Kremlin’s resilience to Western sanctions is finally starting to fade, economists told Insider.
The Kremlin is considering raising oil and gas taxes in a bid to bolster next year’s federal budget, according to a report, as Western sanctions appear to weigh more heavily on the Russian economy.
The new levy would bring in around 1.4 trillion rubles ($50 billion), according to Russian newspaper Kommersant, citing people familiar with the matter.
The Russian government wants to increase export duties on natural gas by up to 50% and introduce a new tax on liquefied natural gas exports, Kommersant said.
The Ministry of Finance has also reportedly proposed a plan to increase taxes on oil exports.
The news of possible tax hikes comes as experts say Russia’s isolation from world markets is starting to hurt its economy.
The United States and the European Union have imposed embargoes on Russian oil, while the main gas importer, Germany, has met its winter storage targets two months early as it tries to wean itself off the Russian fuel.
Oil and gas exports account for about 45% of Russia’s federal budget, according to the International Energy Agency.
The Finance Ministry has stopped publishing monthly reports since the war in Ukraine broke out in February, but documents reviewed by Bloomberg showed it had lost billions to Western sanctions, with its budget surplus falling by 137 billion rubles ($2.1 billion) in August.
“The fact that they don’t release a lot of economic data indicates that they know there are costs, but they would like to hide the magnitude of those costs,” Don Hanna, an economist at UC Berkeley, told Insider. last week. “All of this is designed to mask the consequences of the invasion of Ukraine on the Russian economy.”
Revenues from oil and gas exports have also fallen due to the appreciation of the ruble against the US dollar – the Russian currency has climbed 112% against the greenback since hitting its lowest level in 2022 on March 8.
A strong ruble reduces Russia’s income from oil and gas exports, since both of these commodities are valued in dollars, or other currencies other than the ruble, in international markets. When Russia converts its energy revenues back into rubles, a high exchange rate means it loses money.
The Russian Finance Ministry did not immediately respond to Insider’s request for comment.