MOSCOW (Reuters) - Vladimir Putin has ordered that a proposal to raise 500 billion roubles ($7.5 billion) a year from metal and mining firms be looked at, but the Russian president has not decided whether to approve the plan by a Kremlin economic aide.
A letter to Putin from Andrei Belousov, which was seen by Reuters, setting out the proposals triggered a sell-off in metal and mining shares on Friday, with Evraz (EVRE.L) dropping 9 percent and diamond miner Alrosa (ALRS.MM) falling 4 percent.
Russia needs extra budget revenue to meet the economic goals set out by Putin after he began a new six-year term in May. The government has already announced plans to raise value added tax from 2019 and increase the retirement age.
Natalia Orlova, chief economist at Alfa Bank, said in a note that government efforts to find extra sources of revenue to cover the goals reflected the authorities seeking a compromise over a planned pension reform that has already sparked anti-Putin protests.
Kremlin spokesman Dmitry Peskov said that while Putin had agreed that the plan should be discussed, he had not decided whether to approve it, while two government sources said it was very rough and needed careful study.
Billionaire Vladimir Lisin, who controls Russia’s top steel producer NLMK (NLMK.MM), said hitting Russian mining and metals companies with an extra burden because they are making profits will only encourage them to be less efficient.
“The proposed method of creating an extra tax base looks like an encouragement for inefficiency: the lower the profitability, the lower the tax that needs to be paid,” Lisin, who also chairs the Russian steel lobby, said in a statement.
Export-focused companies such as metals and mining firms as well as the energy sector, have benefited from the weaker rouble which has been under pressure since 2014, when the first Western sanctions were imposed on Moscow over Ukraine.
Since then, the government has pressed state companies for higher dividends and imposed extra taxes on state gas giant Gazprom (GAZP.MM) this year.
Reporting by Gleb Stolyarov; additional reporting by Tom Balmforth and Polina Nikolskaya, writing by Andrey Ostroukh and Denis Pinchuk; editing by Jason Neely/Katya Golubkova/Alexander Smith