This paper aims to discuss about the several budget plans made by the government of Russia for the oil sector. We will analyze the situation year wise. The price of the oil has been increasing over the last four or five years. The government of Russia plans to reduce the deficits by increasing the income taxes as well as the oil prices.
The Russian budget has been giving a lot of emphasis on the energy sector, especially oil and gas, over the last few years. Russia was the second highest oil producer in the world, after Saudi Arabia. Here we will discuss the budget proposals made for the oil sector over the several financial year.
The Russian budget for 2004 witnessed a hike in the oil extraction tax rate and oil export duties. The government planned to increase the oil extraction tax 53 rubles per metric ton. Previously it was 347 rubles. Those changes had been made effective from August 2004. The oil export duty was set at 45% when the global prices of oil ranged between 20 to 25 dollars per barrel and 65% when the global prices went beyond 25 dollars per barrel.
The government started several initiatives to collect taxes from the oil companies on a regular basis. The money would be directly sent to the stabilization funds.
The 2005 budget proposed to increase the price of the oil upto 50 dollars per barrel. Income from oil exports was estimated at 90 billion dollars.
In 2007 the oil price was 61 dollars per barrel while in the 2008’s budget, the price was set at 74 dollars per barrel.
Therefore it is seen that the oil prices have been increasing over the last five years. The Russian government has been trying to minimize the budget deficit by increasing the oil prices.