Government wants to raise coal taxes

Credit: Alexander Kryazhev | RIAN

The Russian government wants to boost budget revenue by raising taxes on extraction of mineral resources, except for oil and gas. The government plans to receive largest tax revenue from coal producers.

The proposals regarding tax increase come from the Finance Ministry. Specifically, it is expected that the extraction tax will go up during the periods of high export prices, Kommersant reports. Coal producers alone can be a source of RUR 40 bln ($631 mio) in additional tax revenue per year.

The Finance Ministry proposes expanding the extraction tax formula with another component that will reflect the situation in international energy markets. This component will be excluded when the export prices drop and applied once the prices start to grow again.

Experts argue that cost efficiency of coal sales will fall significantly. Company representatives claim that the coal market is in crisis and the new tax will inflict even more damage. Business people fear that the tax will prevent them from investing in production upgrade and, as a result, the market will continue to stagnate.

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