Russia's Kudrin says against further tax cuts

MOSCOW (Reuters) - Russia's Finance Minister Alexei Kudrin said on Tuesday he expected the government to decide on its future tax policies later this month, but added the oil industry should not expect any more large tax breaks.

Kudrin, the government's main fiscal hawk, said the oil industry has already received large tax breaks as part of the most recent reform and this should be enough to revive crude output growth.

"(If oil firms are not happy) I'd suggest they offer their assets and fields at open auctions. I'm sure there will be an awful lot of people wanting to buy them with the current tax burden," Kudrin said at an interview at the Reuters Russia Investment Summit.

"As an economist, I can say that Russia has reached a line beyond which you cannot cut taxes."

Instead, Kudrin argues that the tax burden should be raised in order to fund pension reforms in a country where the average pension stands at just 4,000 roubles ($158.40) a month.

"Some will say it (raising taxes) is not a liberal position... But I'm not afraid about my image," he said.

He said the country will spend all its reserve fund and national wealth fund, currently at $174 billion, by 2027 as the share of windfall revenues from energy exports will fall to 11 percent of the GDP from around 25 percent currently.

"It is almost impossible to reduce taxes in a situation with such a trend," said Kudrin, whose ministry is fighting against the growth-focused Economy Ministry, which wants to cut the value added tax to 12 percent from the current 18 percent.

"I don't see any well-founded proposals (from the Economy Ministry). Their proposals are not balanced," he said, adding that the final decision on taxes would likely be taken in September by President Dmitry Medvedev.

Russian oil firms have repeatedly asked for additional tax breaks from the government, saying they need more funds to invest in new fields and revive production growth.

They have already received around 100 billion roubles in tax breaks from next year and agreed with the government that new and depleted fields will be exempted from levies.

But they asked for more from 2010 with proposals ranging from breaks that would allow oil firms to save up to 400 billion roubles, requested by oil major Lukoil, and one for a more modest 100-200 billion, proposed by government and Kremlin officials.

Kudrin said he would fight hard to prevent that from happening.

"So far, we are not considering such proposals. It could happen in the future... But in 2010 it is unlikely."

"All new fields are already enjoying tax holidays. It is a pretty serious measure in itself," he said.

(Reporting by Dmitry Zhdannikov and Andrey Ostroukh; editing by Jason Neely)