The Kremlin backed off a plan for a big tax increase on metal, mining, and chemical companies, in return for company pledges to invest in social projects that serve the nation, according to Bloomberg. Russian First Deputy Prime Minister Anton Siluanov told companies on Aug. 24 that taxes should remain unchanged, resisting a proposal from the President Vladimir Putin’s top economic aide, Andrey Belousov, that higher taxes could generate about 500 billion rubles ($7.5 billion) a year in additional revenue for the state budget. Siluanov, who is also Finance Minister, said that the government and companies will work on joint projects “that would be interesting to both parties.”
Belousov relented, telling reporters that if companies are ready to cooperate, it would be wrong to force them to invest in social projects through higher taxes. His initial proposal would have brought the taxes on metal, mining, and chemical companies in line with those in the oil and gas sector. He had argued that mining and chemical industries aren’t paying taxes on the windfall earnings generated by a rally in commodity prices and weaker ruble.
The Finance Ministry argued, however, that the tax proposals would hurt Russia’s investment climate.