Taxes and Customs Duties as Instruments of Oil Rent Withdrawal to the Russian Budget Revenue

For countries focused on the extraction and processing of natural resources, including Russia, the crucial task is to ensure the rational extraction and distribution of natural rent. The tax model applied to natural rent should facilitate its optimal allocation to the budget without undermining the motivation of resource users to invest. The purpose of this study is to gauge the extent of oil rent extraction to the Russian budget and to propose strategies to improve the efficiency of oil rent redistribution to the state budget. According to the author’s hypothesis, export customs duties, compared to the mineral extraction tax, are more effective in achieving the desired redistribution of funds from resource users to the budget. The analysis shows that from 2005 to 2022 up to 87% of the oil rent received in Russia was extracted through rent payments to the state budget. However, in recent years the degree of oil rent extraction has decreased to 56%. This decline can be attributed to the tax maneuver initiated in Russia since 2015, entailing the reduction and eventual abolition of export customs duties and an increase in the mineral extraction tax rate. The results obtained indicate a decline in effectiveness of rent-based taxation in Russia due to the decreasing fiscal significance of rent payments. Furthermore, their regulatory function, designed to stimulate taxpayers to make investments, has weakened. These findings provide valuable insights for shaping fiscal policies and lay the foundation for further research in this area.

Authors

Publication Details

Journal
Financial Journal
Published
2024-10-01
DOI
https://doi.org/10.31107/2075-1990-2024-5-121-139
Citations
2
Primary Topic
Economic and Technological Developments in Russia
Type
article
Field-Weighted Citation Impact
2.80
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article

Taxes and Customs Duties as Instruments of Oil Rent Withdrawal to the Russian Budget Revenue

D. Yu. Fedotov
2 citations
Financial Journal
Economic and Technological Developments in Russia
2.80
article

Taxes and Customs Duties as Instruments of Oil Rent Withdrawal to the Russian Budget Revenue

D. Yu. Fedotov
article en
2 citations

Abstract

For countries focused on the extraction and processing of natural resources, including Russia, the crucial task is to ensure the rational extraction and distribution of natural rent. The tax model applied to natural rent should facilitate its optimal allocation to the budget without undermining the motivation of resource users to invest. The purpose of this study is to gauge the extent of oil rent extraction to the Russian budget and to propose strategies to improve the efficiency of oil rent redistribution to the state budget. According to the author’s hypothesis, export customs duties, compared to the mineral extraction tax, are more effective in achieving the desired redistribution of funds from resource users to the budget. The analysis shows that from 2005 to 2022 up to 87% of the oil rent received in Russia was extracted through rent payments to the state budget. However, in recent years the degree of oil rent extraction has decreased to 56%. This decline can be attributed to the tax maneuver initiated in Russia since 2015, entailing the reduction and eventual abolition of export customs duties and an increase in the mineral extraction tax rate. The results obtained indicate a decline in effectiveness of rent-based taxation in Russia due to the decreasing fiscal significance of rent payments. Furthermore, their regulatory function, designed to stimulate taxpayers to make investments, has weakened. These findings provide valuable insights for shaping fiscal policies and lay the foundation for further research in this area.

Financial JournalVol. 16(5)
Openalex Percentile: Top 8%
Economic and Technological Developments in Russia
2.80
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Taxes and Customs Duties as Instruments of Oil Rent Withdrawal to the Russian Budget Revenue — D. Yu. Fedotov · Financial Journal (2024) | TGRS Research Map | TGRS