Russia FinMin says lower oil taxes not in sight

MOSCOW, Jan 31 (Reuters) - Russia may raise taxes on the gas industry but has no plans to cut them for the oil sector despite complaints from oil firms that they need more cash for investments, a government official said on Thursday.

"We are planning no radical steps to decrease taxation on the oil industry," the head of tax department at the Finance Ministry, Ilya Trunin, told a conference in Moscow.

"We think that the tax burden on this (gas) sector should increase," Trunin told the conference, organised by Troika Dialog brokerage.

Russian state and private oil companies have repeatedly called on the government to reduce taxation, which they describe as the heaviest after Norway, as they say they have run out of cash to invest in new fields and may face output stagnation soon.

The government argues that oil majors still generate healthy profits, enough to fund expensive projects and provide investors with reasonable returns.

For example, Russia's No.2 oil producer Lukoil (LKOH.MM: Quote, Profile, Research) expects its net profit to rise to over $8 billion in 2007, up from $7.48 billion in 2006.

Trunin said heavy taxation of the oil industry has enabled a reduction of the burden on other industries to support economic growth, echoing earlier comments by deputy Finance Minister Sergei Shatalov.

Shatalov said earlier this week he saw no room for future tax cuts given rapidly rising social welfare spending and uncertainty over global financial and commodities markets.

Finance Minister Alexei Kudrin suggested last year raising the mineral extraction tax on gas five-fold as gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) and other producers pay much lower taxes than the oil sector.