The Russian Prime Minister, Vladimir Putin announced DUMEI’s intention to block the increase of taxes for log export to Finland.
The increase has been postponed for 9 to 12 months. In exchange for this favour Russia is waiting for Finland’s agreement on the Nord Steam project. Yet, Vladimir Putin declared that the decision to delay the introduction of higher taxes on exports is Russia’s solution to maintain the balance of Finland’s economy.
Finland’s wood industry had suffered immediately after the implementation of the new law. In the last months alone many small and medium size companies have filled for bankruptcy and large companies started dismissing employees. Every year, Finland imports aproximately 16-18% of Russia’s total log exports.
In February 2007, Mihail Fradcov signed the new law which imposed immediate increases of taxes over log exports.
Thus, starting with the 1 June 2007, taxes raised up to 20% of the tranzaction cost – aproximately 10 euro/m³. On the 1 of April 2008, the tax raised to 15 euro/m³, and is was predicted that the value would reach 80% by January 2009 – 50 euro/m³.
The project was supposed to encourage both national producers and international manufacturers to invest in processing wood from Russia and to descourage log exports. Unfortunately, there are no sawmills in some regions in Russia, known for the large quantities of wood that they export. In regions like Karelya si Irkutsk, log manufacturerswould have filled for bankruptcy right after the law was instated or would have shut down once the project was finished due to the 80% increase in taxes.
Thus, in the storehouses from Karelya si Irkutsk 85000 m³ of timber are kept, withoue being exploited. Due to the fact that there are no sawmills in the region, the wood cannot be processed. Now, producers have the opportunity tosell it to Finish importers, who will jump at the chance.
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