Comments by "Caesar Renasci" (@CaesarRenasci) on "ИГОРЬ ЛИПСИЦ"
channel.
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What goes into the budget of Russia or any other country is the tax on profit. The tax on profit is a stated percentage of profit. The government therefore gains nothing if the profit is nil. The profit is nil when the revenue of the business is equal or smaller that its cost. Whereas the cost is determined by the technology employed by the business, the revenue is determined by the MARKET . The smaller the price of oil, therefore, the smaller are the revenue and the profit. At a certain market price, the business has no profit.
Example 1: Russia. The cost of mining oil (technology) is $40/billion (per barrel). At rhe price ewual $40, therefore, Russian oil business has no profit, contributes nothing to the budget, and country has no money to finance anything, including wars.
If the price is $75/barrel and the tax rate is 20%, say, then the business has profit of $75-$50=$15 from each barrel amd contributes 20% × $15 =$3 to the budget, which the government uses for the invasion of and the war in Ukraine.
Example 2. A business elsewhere with the cost of mining $7 (as in Saudi Arabia). At the oil price of $60, therefore, the business derives profit of $53, while Russia is bankrupt.
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What goes into the budget of Russia or any other country is the tax on profit. The tax on profit is a stated percentage of profit. The government therefore gains nothing if the profit is nil. The profit is nil when the revenue of the business is equal or smaller that its cost. Whereas the cost is determined by the technology employed by the business, the revenue is determined by the MARKET . The smaller the price of oil, therefore, the smaller are the revenue and the profit. At a certain market price, the business has no profit.
Example 1: Russia. The cost of mining oil (technology) is $40/billion (per barrel). At rhe price ewual $40, therefore, Russian oil business has no profit, contributes nothing to the budget, and country has no money to finance anything, including wars.
If the price is $75/barrel and the tax rate is 20%, say, then the business has profit of $75-$50=$15 from each barrel amd contributes 20% × $15 =$3 to the budget, which the government uses for the invasion of and the war in Ukraine.
Example 2. A business elsewhere with the cost of mining $7 (as in Saudi Arabia). At the oil price of $60, therefore, the business derives profit of $53, while Russia is bankrupt.
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