The Kremlin is going the way of all petro states: Hiking the rent and putting its feet up.
Finance Minister Alexei Kudrin anounced a series of taxes in the energy sector and elsewhere that will raise $33 billion over three years.
The ministry wants to raise the extraction tax on gas by 61 per cent next year, followed by hikes of 6 per cent and 5.4 per cent in 2012 and 2013, respectively, said Ilya Trunin, head of the Finance Ministry’s tax policy department. The increased taxes on gas would bring in an extra 180 billion rubles over three years, he told reporters.
A similar measure was proposed for the oil extraction tax, with a 6.5 per cent hike in 2012 and a 5.4 per cent rise in 2013, bringing in an extra 225 billion rubles.
A 61% hike on natural gas taxes would certainly cause tremors globally — as Russia holds a quarter of global reserves. The effects could be even greater if Russia inspires America to increase its own extraordinarily low energy sector taxes, as many have suggested.
As for the Russians, this suggests a slow descent into the Rentier Curse, where they, like the average Kuwaiti, will lose an appetite for industry — except the occasional software and telecom company.
Don’t miss: Why Russia Is Toast
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