Pegging gas extraction tax to world prices

Russia's Finance Ministry has proposed the government should peg the gas extraction tax to international gas prices from 2013, Deputy Finance Minister Sergei Shatalov said on Tuesday. "As for gas, we'll probably try to switch to a formula next year pegged to international prices so that we don't have to make readjustments every year by an amount that is not quite comprehensible," Shatalov said, adding that the formula pegging the oil extraction tax to international oil prices should be used as a guideline. This measure will help keep the tax burden on the gas industry stable, he said. Russian President Dmitry Medvedev said in his budget address to parliament in June that the tax burden on the gas sector needs to be increased to boost budget revenues. "To increase budget revenues, and taking into account the favorable price conditions on external markets, it is necessary to continue increasing the tax burden on the gas sector, which means collecting surplus revenues from taxpayers receiving them through their operations on world natural gas markets," Medvedev said. The Russian government is discussing measures to raise the subsoil tax on gas production from next year, and double it for the gas monopoly Gazprom. For independent gas producers the mineral extraction tax will rise to only 251 rubles per 1,000 cubic meters in 2012 from the current 237 rubles for all gas producers and to 265 rubles in 2013 under the formula in the Tax Code.