Tax Maneuver: Economic Growth Acceleration to the Detriment of Budget Consolidation

Abstract

The taxation reform in the oil and oil-refining industries in 2014 – the ‘tax maneuver’ – was designed to boost the performance of domestic oil refineries. In late 2015, the planned reduction of export duty was suspended in order to keep unchanged the volume of tax-generated revenues under the new terms of trade. However, our calculations demonstrate that full implementation of the tax maneuver will not only result in the accomplishment of that task, but prevent growth of wholesale and retail prices of petroleum products, as well as conduce to increasing the value added created by Russia’s oil refining sector.