Moskovsky Komsomolets
Parliament Rejects Luxury Tax, May Adopt Property Tax
On May 30, the State Duma Committee on Budget and Taxes held a hearing on the Tax Policy Guidelines for 2013 and for 2014-2015, as approved by the government on May 2. Officials, deputies and business people all said the document could stand some adjustment.
There will be no luxury tax in Russia. “The issue of a luxury tax should be considered within the context of the planned property tax,” Finance Minister Anton Siluanov said.
A maximum property tax of 0.3 percent of the cadastral value, which the regional authorities may not reduce, will be approved for property whose aggregate cadastral value exceeds 300 million rubles ($9.2 million). Those with fast cars (410 hp or more) will pay a transport tax of 300 rubles ($9.24) per horsepower.
Instead of a luxury tax that would only be levied on the rich, a property tax has been approved for all Russians. The rate will be 0.05 percent to 0.3 percent of the cadastral value. “Following the real estate assessment program, and the resulting real estate cadastre, government amendments to the law on property tax should be ready by the fourth quarter of 2012,” Siluanov said.
Audit Chamber auditor Sergei Vasilyev, who spoke after Siluanov left, said “the cadastre is only about 40% ready, and the figure is much lower in some regions. It’s only 18% done in the Vladimir Region.” It is unclear if the Finance Minister can speed up the process in the remaining three months.
There are also doubts about the ministry’s other proposals, in particular to levy an additional 20 percent tax on the funds withdrawn to offshore havens. To accomplish this, the ministry will need direct access to money transfer documents, which explains its desire to get rid of the bank privacy law. The guidelines have a clause obliging banks to disclose private data at the request of the Finance Ministry rather than by court order.
“We can discuss initiatives, but what good does it do if the Finance Ministry’s documents contradict one another?” argues Andrei Makarov, chairman of the Committee on Budget and Taxes. “The ministry has proposed electronic transfers, but it also insists on rolling back account privacy.”
The guidelines also include a few positive aspects. For example, the tax on stock exchange transactions would be slashed after the agreements on Russia’s accession to the WTO are ratified, while the planned annual increase of 40% for alcohol and tobacco excise taxes would theoretically improve Russians’ health.
Most speakers criticized the document, but Finance Ministry officials kept silent because the government approved it on May 2. The only positive result of these debates is that further tax hearings will be held in February, before the document is submitted to the government.
Kommersant
CIS countries seek to bypass Russia’s gas transit routes
Turkmenistan’s President Gurbanguly Berdimuhamedov, who hosted the CIS heads of government meeting Wednesday, openly lobbied for his country’s gas interests during the meeting in Ashgabat.
Turkmenistan, which has the world's fourth largest natural gas reserves, has never been all that active in the Commonwealth of Independent States. But that seems to have changed with the country’s presidency of the CIS in 2012. The reason for the sudden change became evident during Berdimuhamedov’s speech at the prime ministers’ meeting, in which the Turkmen leader said clearly that he deems energy to be the top priority among CIS cooperation issues. “Turkmenistan’s proposal is to start a dialogue on the transport of energy resources, to work out clear and transparent conditions for distribution,” he explained.
Turkmenistan, with proven gas reserves of 25.13 trillion cubic meters, has no access to European markets, something it desperately needs. It exports 30 billion cubic meters a year, but would like to bump that up to 180 billion, which would rival Russia and would obviously affect global gas prices.
Turkmenistan is intent on finding alternative gas distribution routes, routes that would bypass Russia. It is currently selling gas to China, and last week, Turkmenistan also signed distribution agreements with India and Pakistan via the U.S.-backed TAPI pipeline across Turkmenistan, Afghanistan, Pakistan and India. If this project goes through, Turkmenistan will pump up to 30 billion cubic meters per year through the TAPI line.
At the same time, Berdimuhamedov has not given up other options including European sales. He proposed setting up a CIS expert group on energy distribution. He also plans to promote this initiative at a higher level: “We think this is a matter of great importance and therefore propose setting up a UN expert group on the security of energy distribution.”
Berdimuhamedov has not been working on this initiative alone: Ukraine, whose vital interests are also tied to natural gas, fully supports it. While trying to rewrite its current gas distribution and transit agreement with Russia, an agreement it continually refers to as “unfair and enslaving,” Ukraine is also seeking alternatives to Russian gas. Turkmenistan could be an option if the commodity didn’t have to be shipped across Russia. Therefore, according to a source in the Ukrainian delegation, Berdimuhamedov agreed to team up with Ukrainian Prime Minister Mykola Azarov and lobby for alternative supply routes and clear transit rules.
This initiative’s success appears questionable, with Russia clearly opposed to it. Prime Minister Dmitry Medvedev’s silence in response was more eloquent than words.
Medvedev held three bilateral meetings in Ashgabat – with the Turkmen president as well as the Ukrainian and Moldovan prime ministers – which also focused on energy. He discussed European distribution routes with Berdimuhamedov and the gas supply contract with Azarov. The Ukrainian source said its contract issue may finally move beyond an impasse as Russian negotiators indicated that the “unfair” pricing could be changed. Medvedev discussed Moldova’s $3.7 billion gas debt with Prime Minister Vlad Filat.
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