‘What if oil price falls?’ — will Tatarstan be able to increase the budget up to forecast?

Treasury revenues will grow to 484.5 billion rubles

One of the first issues the committee members considered was the draft amendments to the law “On the Budget of the Republic of Tatarstan for 2024 and for the planning period of 2025 and 2026”. As Minister of Finance of the Republic of Tatarstan Radik Gayzatullin stated, taking into account the budget implementation for 8 months of the year, it is proposed to increase the tax and non-tax revenues of the republican treasury by 50.2 billion rubles. The planned purpose of corporate income tax is to increase it by 22.2 billion rubles. The changes are made taking into account the actual and expected tax receipts for certain sectors of the economy.

By the income tax, the planned figure is proposed to be increased by 15 billion, taking into account the fact of tax receipts, mainly associated with an increase in average wages. Due to the increase in the number of taxpayers and the tax base, it is proposed to increase the plan for taxes on total income by 4 billion. On corporate property tax — by 0.9 billion rubles. The volume of non-tax revenues — by 7.98 billion.

The Gratuitous Receipts section will grow by 4.3 billion due to inter-budgetary transfers from the federal budget and other revenues. At the same time, it is proposed to take into account the decrease in the volume of inter-budgetary transfers in four areas: payment for utilities services to certain categories of citizens — 120 million; development of transport infrastructure in rural areas — 15.1 million; implementation of programs for the formation of a modern urban environment — 5.6 million; creation of a comfortable urban environment in small towns and historical settlements — winners of the All-Russian competition of the best projects creation of a comfortable urban environment — 0.8 million rubles.

They also propose to include an article on postponing the repayment of budget loans issued to Kazan from the budget of the Republic of Tatarstan for the preparation for the Universiade, with the establishment of a repayment period from 2028 to 2037.

In general, it is proposed to increase the revenue part of the Tatarstan budget by 54.6 billion rubles in 2024. The expenditure part is 39.2 billion rubles. These are mainly expenses related to the renovation of social and engineering infrastructure, as well as roads in Kazan in preparation for the BRICS Summit. The treasury deficit will be reduced by 15.3 billion rubles.

“These should be tough changes: the dollar has fallen or oil has not been sold”

Taking into account all the proposals, the total budget of Tatarstan for the current year is projected: 484.5 billion rubles in revenue, 485.8 billion in expenses, and 1.36 billion in deficit (the deficit is provided by sources of financing). The parameters for 2025 and 2026 do not change, the head of the ministry of finance of the Republic of Tatarstan said.

“Today we are discussing the issue of increasing the budget of 2024 by a large amount — by 54.6 billion rubles. There's not much time left until the end of the year. Are there any other risks that we may not reach the figures? Conditionally: oil price drops sharply, will it affect, though not immediately, but still, or will some other problems arise?” Leonid Yakunin, the chairman of the State Duma Committee on Budget, Taxes and Finance, asked.

“I think there are always risks. But today we have data actually for 8 months and expected one for 9 months, we also held meetings with large enterprises. According to the taxes that we expect, if there are no sharp fluctuations, and these should be very harsh changes: perhaps, the dollar falls, oil companies do not sell oil, or there should be some kind of catastrophic situation at all — in our opinion, all the volumes that have been budgeted are feasible. Moreover, they are made on the basis of meetings with enterprises. Therefore, we believe that the changes we are making are reasonable and feasible," said Radik Gayzatullin.

Deputy Dmitry Samarenkin, the first deputy head of the Kazan Fat Plant (part of Nefis Group), asked whether it was worth expecting an easing of the monetary policy of the Bank of Russia in the coming months: “Over the past year, the Central Bank's rate has sharply increased. Many businesses are leveraged, including the one I work for. What is your opinion — will the rate fall? It affects, among other things, in tax histories.”

“Whether there will be a decrease, we cannot say yet today — it is up to the Central Bank to decide. There is a certain aggravation for businesses, yes. But according to the information that we hear now, it is possible that the rate will go down," the minister replied.

“At least, everyone expects that the rate will go down and decrease, because the development of the economy depends on it," Leonid Yakunin joined in.

When asked if there have become more unprofitable enterprises, the head of the Ministry of Finance did not name figures, but said that compared with last year there is a reduction in income tax in the republic. If in 2023, the total revenue for the year amounted to 183 billion rubles, then this year the project includes about 140 billion.

“Here we have a decline mainly in the oil industry. Even if we look at Tatneft: last year it transferred 58 billion in income tax, 43 billion is expected this year. This is the effect of the exchange rate difference, remember, last year there was a sharp increase in the dollar exchange rate. This year it is much lower, and there is an impact of the price factor. Output is also decreasing, for example, for Tatneft, a reduction is 1.3 million tonnes. The factors are well-known, but in general, for those enterprises that reduce, we are aware of this and are working with them," Gayzatullin said.

According to him, the main factor in the decline in income tax receipts is a decrease in sales volume. Although, of course, the creditworthiness of enterprises that have to pay loans at a high interest rate also affects.

The head of the committee noted a positive trend: the republic has traditionally increased the projected budget values for 10 years. This allows additional financing of problematic items for the treasury. The deputies unanimously voted to include the draft in the agenda of the State Council of the Republic of Tatarstan.

“There are cases when real estate is sold below the cadastral value, it is fundamentally underestimated”

A couple more questions at the meeting caused discussion and clarification. Among them, there is a draft on the invalidation of an article of the Law of the Republic of Tatarstan on tax rates for those applying the simplified taxation system.

“You know that a large package of federal legislative acts has been adopted, which includes a number of changes in tax matters. According to the draft law, it turns out that for those who work under the simplified procedure, high rates are cancelled. Where the rates were 8% and 20%, they are cancelled and the rates are set at only 6% and 15% — this is the essence of this project. For a taxpayer who works under simplified taxation, this is quite normal in certain amounts, which are laid down in the legislation," Yakunin explained.

Another issue concerned the establishment of the reduction coefficient size for determining the taxpayer's income from the sale of real estate. It was developed in connection with the adoption of a new federal law (FZ-176) this summer. From January 1, 2025, the subjects of Russia were given the right to increase the coefficient from 0.7 to 1 if the taxpayer's income from the sale of an object of real estate is less than the cadastral value of this object.

“We discussed at previous meetings that today it is the policy of the government of the Russian Federation that these objects be sold at cadastral value. There may be some questions here, primarily from businesses that do not agree with the cadastral price of the object. But this is decided in accordance with the established procedure through the relevant authorities, the court, in order to lead either to the cadastral value, or, conversely, to the market value," Yakunin noted.

According to him, the bill will increase revenues to the consolidated budget of the republic: “Since we are significantly losing the republic's budget, at that meeting of the State Council we called the figures, wrote an appeal to the government, what amounts we are losing. Colleagues will confirm that there are cases when real estate is sold below the cadastral value, that is, it is fundamentally underestimated, I would say so.” Olesya Kuzmina, the deputy head of the Federal Tax Service for the Republic of Tatarstan, confirmed at the request of the speaker that “there are such cases and there are cases when they disagree with the cadastral value”.

“I won't tell you the figures, but there were eight appeals regarding the issues of cadastral value. We send applicants, so to speak, to the address so that they appeal the cadastral value, because it must be decided in the appropriate manner, not through the tax authority," she explained.

Yakunin said that, according to his data, about 200 applications for the cadastral value of real estate objects are being considered in the republic and the figure “constantly changes”. Nevertheless, the draft received a positive conclusion, the deputies voted for its inclusion in the agenda of the parliamentary session.

Projects were also approved that relate to amendments to certain legislative acts of the republic, standards for the regional labour market, financial provision of state guarantees for the realisation of educational rights, budget execution of the Federal Compulsory Medical Insurance Fund of the Republic of Tatarstan as of July 1, 2024, and the work plan of the committee for the next quarter of the year.