Top Kremlin aide Arkady Dvorkovich called on Saturday for more tax cuts in the oil industry from 2010, saying recently approved reductions were not enough to revive production growth. "Our calculations shows that the approved measures are enough to stabilise production. It is not enough for growth," said Dvorkovich, the top economic aide to President Dmitry Medvedev.
The Russian government cleared last month a proposal to reduce the mineral extraction tax on oil. Finance Minister Alexei Kudrin has said the measure will allow oil firms to save over $4 billion annually. Russian oil production has been falling since January in sharp contrast to previous years, when it rose steeply. Oil companies have complained loudly that their tax burden is too high.
Prime Minister Vladimir Putin has insisted that production will rise in the next few years. Dvorkovich said new tax breaks for the oil sector planned from 2010 would bring savings of about 200 billion roubles ($8.40 billion) for oil companies with about half that figure resulting from the mineral extraction tax alone.
The Kremlin aide said the proposals will include changing the way the mineral extraction tax is calculated, better administration, more differentiated taxation of different oil fields and amortisation tax breaks.
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