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Putin calls for oil tax cuts, lower inflation
MOSCOW
Petroleumworld.com, May 8, 2008Russian Prime Minister Vladimir Putin on Thursday called for lower taxes on oil companies and measures to cut inflation to below 10 percent as he took office.
Putin said Russia had become "a different country" under his eight-year presidency, which ended Wednesday when his chosen successor Dmitry Medvedev was inaugurated.
Putin, who was easily confirmed by parliament to become prime minister, said he would turn Russia into a major financial centre and overtake Britain to become the world's sixth largest economy by the end of 2008.
"The revenues of oil companies are not low but you and I take a significant part of their profits into the budget.... We need to lower taxes in this sector," Putin told lawmakers before they voted on his nomination as premier.
Lower taxes on oil companies, Putin said, would help stimulate the development of new oil fields and more refining capacity, both of which Russia has lagged behind on despite being the world's largest energy producer.
Russia's RTS stock market index rose nearly three percent after the speech just before Putin was confirmed as prime minister, with shares in Russia's biggest oil company, state-controlled Rosneft, rising more than five percent.
"Former president Vladimir Putin reignited the stock market today by outlining an ambitious set of policy priorities," the Russia office of Deutsche Bank said in a statement hailing the speech.
"Most important of all was a clear message coming from Putin on the need to reduce the tax burden on the oil sector in order to stimulate production and refining of crude oil," the statement said.
Russia has seen a startling economic revival in recent years mainly based on oil and gas exports amid record-high world prices and Putin as president has backed a more powerful role for the state in the oil business.
Rosneft has emerged as the country's largest producer under the chairmanship of Putin aide Igor Sechin, purchasing assets from the bankrupt Yukos oil giant, which was broken up in a legal onslaught seen as steered by the Kremlin.
In Thursday's speech Putin also called for tax cuts in other sectors of the economy such as construction and education, saying: "We need to lower taxes to add a stimulus for the economic development of the country."
Referring to a much higher than expected inflation rate of 11.9 percent in 2007, Putin called for the government to lower prices, saying: "Our aim is to have single-figure inflation within a year and for the next few years."
He said that a large part of inflation was the rise in food prices -- a global phenomenon -- and called for measures to promote the agriculture sector in order to reduce high-priced food imports.
Putin said Russia was now the seventh largest economy in the world and would overtake Britain to become the sixth largest by the end of the year, but warned there was a need for better infrastructure and higher labour productivity.
"I am sure that Russia should become one of the main financial centres in the world," Putin said. He also called for the "external expansion of national capital," an apparent reference to foreign investments by Russian companies.
Based on purchasing power, the International Monetary Fund says Britain is the world's sixth largest economy, with Russia in seventh place.
Based on gross domestic product, most international institutions say Britain's economy is the fifth largest, with Russia in 10th or 11th place.
Story by Dario Thuburn from AFP
AFP 08 1149 GMT 05 08
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