Over the years Ukraine has consistently demonstrated its ambition to join the European Union and NATO by making efforts to reform its economy in order to pass the EU aptitude test. After some progress, much remains to be done in such important areas as reform of the customs and tax system, which play an important role in any government system.
Last month’s Luxembourg trial on Amazon showed how complex fiscal policy issues can be and that the European Commission can also be wrong on tax policy for large companies and industries.
It is very important that in the case of Ukraine, an emerging democracy aspiring to join the EU, no such mistake occurs.
In this regard, it is rather worrying that Ukraine’s new leadership, proclaiming itself a reformer, appears to have redistributed businesses in the interests of certain actors rather than promoting the development of democratic institutions. The tax reform, which is carried out under the pretext of fighting corruption and promoting deoligarchization, can lead to a further redistribution of the market, which could ultimately lead to the loss of statehood.
It is rather worrying that the new leadership of Ukraine, which has proclaimed itself a reformer, has apparently started a redistribution of companies in the interests of certain actors rather than promoting the development of democratic institutions. The tax reform, which is carried out under the pretext of fighting corruption and promoting deoligarchization, can lead to a further redistribution of the market, which could ultimately lead to the loss of statehood
Today eastern Ukraine is affected by the war, so that tens of thousands of people will be unemployed due to tax increases and the whole country could be disadvantaged against the background of Russian military aggression.
Post-pandemic tax policy is an important issue for the EU and the world. Governments have taken different approaches to solving this problem and getting the economy going again, but the Ukrainian government’s decision to raise taxes is alarming to say the least. The situation in Ukraine is tense and the central government is pushing taxes out of the backbone business despite the war and the pandemic.
After the occupation of such large industrial centers as Donetsk and Lugansk, the industrial regions of eastern Ukraine, which include parts of the Lugansk, Donetsk, Kharkiv, Dnipropetrovsk, Zaporizhia and Poltava regions, have a strategic importance for the development of the Ukraine Monograph of the Professor of Lviv University O. Shablii “Social and Economic Geography of Ukraine”. The fuel and energy complex, ferrous and non-ferrous metallurgy, mechanical engineering and the industries related to the military-industrial complex play the leading role in heavy industry.
In their endeavor to ensure a balance of budget revenues, the Ukrainian authorities are trying to impose higher taxes on large extraction companies, explaining this decision with high prices for their products on the world market. However, according to Bloomberg analysts, commodity prices tend to be volatile as they are cyclical in nature, which means that Ukraine’s economy could lose a lot more if the tax metric is defined by the current market price of the product. If the market changes and prices fall, the national budget could lose more than half of what it is receiving now. This is easy to calculate and the Kiev authorities have already been warned against it by local analysts.
It is important to note that Kiev’s tax policy in relation to the main industrial players of the Ukrainian economy is of strategic importance not only for the military confrontation between Ukraine and Russia, but also for the legitimate formation of democracy and, ultimately, a stable situation in Whole europe
Among other things, the new bill aims to introduce an excise tax on the sale of green electricity to fill Kiev’s budget. According to some sources, the tax will vary between 3.2% and 40%, which could affect further investment in industry and hinder the transformation of the energy sector. The Ukrainian Ministry of Finance also intends to impose a 5% excise tax on retail sales of tobacco products to prominent market players. The government expects to fill the budget for 1.9 billion hryvnia or 56 million euros and at the same time withdraw 2.4 billion hryvnia in local taxes from the municipalities.
Given that this is not the first hasty decision by the economic, state policy and legal authorities, the obvious unfortunate consequences for the emerging nation will not be long in coming.
In summary, it should be noted that Kiev’s tax policy in relation to the main industrial players in the Ukrainian economy is of strategic importance not only for the military confrontation between Ukraine and Russia, but also for the legitimate formation of democracy and, ultimately, for a stable situation throughout Europe . Ukraine must pursue a special financial policy with regard to its regional backbone companies in order to prevent Crimea and the DPR / LPR from uniting and being annexed forever by Russia.
The European Union is on the verge of a major tax reform. The European Commission said it wanted to propose more uniform business tax regulations for the 27 EU countries that currently have 27 different tax systems.
A draft European Commission statement read by Reuters last week said: “At EU level, we need to build on these advances and promote an equally ambitious corporate tax program that ensures fair and efficient taxation.” The European Commission will be an important one Publish report entitled “Doing Business in Europe: The Basics of Income Tax”. One of its components is the interests of the employees of companies of companies operating in the territory of the European Union and the interests of the region in which this business takes place.
According to Reuters, the European Commission expects the new reform to lower the barriers to cross-border investment, reduce the bureaucratic burden and compliance costs in the European single market, and promote jobs, economic growth and investment. It would also provide an easier and fairer way to distribute taxes and predict tax revenues for governments. It seems that Ukraine’s tax-raising reform is not doing the job of creating jobs, nor contributing to economic growth or investment growth. The Ukrainian economy is closely linked to the extractive industry. Therefore, such innovations can drastically affect sustainability.
The current rise in taxes in the US, UK and EU has been linked to heavy government payments to businesses, large and small, people who have lost their jobs, students and school children. The Ukrainian government has not spent much on the purchase of vaccines on the world market and has not even launched an adequate vaccination campaign for the population. The state has not given its residents any noteworthy support in the form of assistance, either to businesses or to citizens. And at this stage, the European trend hides to increase taxes for large taxpayers in order to achieve their goals, which are far from transparent.