ANATOLY GOLOMOLZIN: THERE IS POTENTIAL FOR IMPROVING TAX MANOEUVRE EFFICIENCY
Deputy Head of FAS was a speaker at the National Oil and Gas Forum – 2019
He informed that fuel prices and fiscal policy are closely interconnected. The adequacy of tax base estimation and, therefore, revenues to the budgets of all levels depend on pricing transparency and competitiveness. In its turn, tax level and dynamics influence the level and dynamics of fuel prices. Taxes have a significant regulatory impact upon prices and market sustainability.
“Reliable price indicators on the oil and oil products markets are created in Russia: exchange quotations, indices of off-exchange prices and price indicators on comparable foreign markets. These indicators are important not only for improving pricing transparency: they are also essential in fiscal policy. Therefore, it is not a coincidence that three regulators became the founders of the Exchange Committee, under the frame of which new pricing institutions are being developed, to fulfill the Order of the President of Russia: FAS, the Bank of Russia and the Federal Tax Service”, said Deputy Head of FAS.
Analyzing the prices on the oil products markets, he pointed out that fuel prices increased approximately by 1.5 times since 2012 while the tax elements in the price of each petrol or diesel fuel liter sold in Russia increased roughly twofold.
“The growth rates for companies’ capital and running costs lagged considerably behind from the price growth, and the main underlying factor was the increased tax burden. Also, taxes can stimulate or de-stimulate. In particular, differentiated excises, which were higher for lower-quality fuel and lower for high-quality fuel, helped modernize oil refining. In several years, oil producers invested 1 trillion RUB in the oil industry and moved to using the best quality – 5th grade fuel but consumers have not noticed than because oil products prices have been changing along with the inflation rate”, explained Anatoly Golomolzin.
Commenting the issues related to the tax maneuver, Deputy Head of FAS pointed that that are very important for the oil and oil products markets.
“This is a long-term programme. It includes stage-by-stage abolishing customs duties for oil and oil products, as well as a commensurate growth of the mineral tax.
It takes place under decreasing regulatory impact of duties set depending on the global market trends and in view of “untying” the Ruble exchange rate from oil prices on the world markets.
“From 2012 to 2017 inclusive, duties and the mineral tax allowed to maintain retail price behaviour close to the inflation rate in view of the floating Ruble exchange rate and wholesale price volatility, in spite of radical changes in the world price trends and levels. 2018 showed that regulating mechanisms stop working properly. Therefore, the goals and objectives are to change the tax regulation system, when flexible excise setting mechanism should be added to flexible setting of mineral taxes and replace flexible duty setting”, thinksDeputy Head of FAS.
“We have not reached our goals yet. Recently we stimulated petrol output, for example, applying special stimulation measures in the form of differentiated excises. Now it has turned out that petrol production become unprofitable due to the tax maneuver. This was the situation in Q1 2019. The Government continues its efforts to finalize the mechanisms necessary to complete the tax maneuver”, summed up Anatoly Golomolzin.