A pessimistic view...
MOSCOW, May 7 (Reuters) - Russian industrial output may be
rising, but factories are simply losing more and more money, a
senior tax official said on Thursday.
The financial sector is pulling the Russian economy forward,
with tax receipts from insurance companies and banks growing
sharply in the first quarter, said Valentina Makareva, head of
the tax service's Profit Tax administration.
"I look only at profit tax, and profit tax suggests a
decline in production," Makareva told a news conference.
"To our great regret, only traders, food producers and most
importantly insurers and banks are among tax payers with rising
taxes."
Russian government officials have steadfastly pointed to
growing industrial output as an indicator of economic
turnaround.
Industrial output was up 1.3 percent year on year in the
first quarter, though Makareva's figures suggested the economy
was producing more and more unprofitable items.
Currently 42 percent of Russian factories are operating at a
loss, she said. "And that is constantly growing."
Calculating profits is tricky business in Russia, where
arcane accounting rules mean revenues are generally based on
cash received rather than items sold, a non-Western distortion
which confuses profits and cash flow.
But Makareva estimated the companies would have reported
losses even based on Western or improved Russian accruals
accounts "It is difficult to give an unequivocal answer," she
said, but her figures suggested losses by any method.
"It does not depend what approach is taken."
First quarter profit tax receipts rose by 1.8 billion
roubles to 8.7 billion, including profits on treasury bills, a
tax service statement said.
But profit tax arrears had inched up 0.3 billion roubles in
the three months to 12.7 billion roubles.
And industry, agriculture and construction industry profits
fell by a combined 0.9 percent. Industrial tax payments fell to
1.8 billion roubles from 3.1 billion, Makareva said.
She said that factories were hit by low cash flows, with top
firms managing to collect only 15 percent of sales in cash.
Producers are hostages to raw materials suppliers and other
traders with whom they have to barter, receiving poor prices for
the goods they produce, she said.
"Production can increase, but they have no raw materials --
their taxes go down."
Bankers, whose profit tax payments tripled to 1.4 billion
roubles last year, are doing well partly at the expense of
industry. Makareva said most loans taken out by industry were
being used to pay taxes rather than for capital investment.
Bank rates are significantly higher than government treasury
bill rates, which now average just over 30 percent in rouble
terms. But the companies are generally not creditworthy anyway,
she said.
"Companies which have decreasing output can't get credit
because they have nothing to mortgage," she said. |
