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Russia: Tax revenues from oil and gas collapsed in May

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Russia: Tax revenues from oil and gas collapsed in May

Russia’s lack of tax revenue from oil and gas is putting pressure on the economy.
MIKHAIL METZEL/SPUTNIK/AFP via Getty Images

Russia’s oil and gas sector revenues plummeted in May as sanctions and slowing exports hit Moscow’s energy trade.

Revenue from the oil and gas tax fell by 36 percent year-on-year to 570.7 billion rubles, around 6.6 billion euros.

Crude oil and petroleum products revenues fell 31 percent, while gas revenues fell 46 percent.

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As Bloomberg reports, the budget revenue is gone russian oil and natural gas in May due to the western sanctions and lower gas exports decreased by more than a third.

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Tax revenue from oil and gas falls 36 percent

According to the country’s Finance Ministry, revenue from oil and gas taxes fell 36 percent year-on-year to 570.7 billion rubles last month.

The revenue from crude oil and petroleum products fell 31 percent to 425.8 billion rubles (about 4.9 billion euros), while the gas revenue by 46 percent to 145 billion rubles (around 1.7 billion euros). This is despite higher revenue from the mineral extraction tax on gas, which was not enough to offset losses on export duties. The revenues from the two commodities account for about a third of Russia’s budget, which is already funded by the Expenditure on Moscow’s war against Ukraine is under pressure.

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The falling revenues are the result of western sanctions against petroleum products used as a punitive measure against Russia for the invasion of Ukraine were imposed and forced Moscow to sell its crude oil at a discounted price alternative markets for sale.

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In retaliation Russia disrupted gas supplies to Europe, its largest market. As Bloomberg reports, revenue from export tariffs fell Gas by 81 percent after Russian gas giant Gazprom restricted pipeline supplies to the West.

New tax could threaten the energy sector

Faced with falling revenues, the Kremlin introduced a new one in April control mechanism for the Russian energy companies, where the tax rate is based on the higher crude oil price of the Brent variety is calculated less a fixed discount. According to the assessment of G7 could the tax the energy sector threaten in the long term, as it deprives the industry of the opportunity to finance future developments.

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The drop in revenue from the energy sector comes at a time when Russia is also struggling with other economic difficulties. A historical labor shortage presses on the industrial production, which fell 5 percent month-on-month in April. And Finland’s central bank has declared that Russia has a “reverse industrialization‘ and likely faces limited growth and a bleak future.

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