Russia is considering plans to raise taxes on energy exports, which could bolster the government’s budget by $50 billion, according to Kommersant. This signals that the Kremlin is finally starting to feel the effects of Western sanctions, economists told Insider.
The new tariffs will raise about 1.4 trillion rubles ($50 billion), according to Russian newspaper Kommersant, which cited sources familiar with the matter.
Russia’s government wants to raise export duties on natural gas to 50% and introduce a new tax on exports of liquefied natural gas, Kommersant said.
The finance ministry has also proposed a plan to increase tax on oil exports.
News of the potential tax hike comes as experts say Russia’s isolation from global markets is starting to hurt its economy.
The US and European Union have imposed sanctions on Russian oil, while major gas importer Germany reached its winter storage target two months early as it seeks to wean itself off Russian fuel.
According to the International Energy Agency, oil and gas exports account for about 45% of Russia’s federal budget.
The finance ministry Anton Siluanov has stopped publishing monthly reports since the start of war in Ukraine in February, but documents reviewed by Bloomberg showed its budget surplus as of August had shrunk by 137 billion rubles ($2.1 billion), costing billions in losses due to Western sanctions.
“The fact that they don’t publish a lot of financial data suggests that they know there are costs, but they want to hide the extent of those costs,” Don Hanna, an economist at UC Berkeley, told Insider last week. “All this is designed to obscure the effects of Ukraine’s invasion on the Russian economy.”
The ruble’s appreciation against the US dollar has also eroded revenues from oil and gas exports – the Russian currency has risen 112% against the greenback since hitting a 2022 low on March 8.
A strong ruble chips away at Russia’s income from oil and gas exports because both commodities are valued in dollars or other non-ruble currencies on international markets. When Russia converts its energy income into rubles, a high exchange rate means it is losing money.