There was a popular saying in the times of stagnation: “What one looks after, one has.” Now it could be paraphrased as, “What one looks after is the object of reforms.” The groups Regions of Ukraine and Solidarity, representing the Party of the Regions in the parliament, are shortly to put on Verkhovna Rada’s agenda a bill On Altering Some Provisions in the Tax Law of Ukraine. For the time being, according to Mykola Azarov, Party of Regions leader and chairman of the State Tax Administration, the bill is being scrutinized by the fractions introducing it.
One of the main changes in the tax system, proposed by the party in the person of this country’s chief tax-man, is the temporary introduction (for about five years) of so- called tax vacations for self- employed natural persons who work without forming a legal entity or hiring labor. According to the latest registration of the subjects of entrepreneurial activity, the party’s press release says, there are 600,000 individuals of this kind and, accordingly, the same number of entrepreneurs (and, incidentally, voters) will be exempt, should the bill pass, from paying all taxes (except, of course, pension and social insurance).
Among the tax innovations proposed by the party is exemption from paying tax on any profit gained as a result of operations with fixed and nonmaterial assets provided this profit is reinvested in the new fixed assets of Ukrainian enterprises, as well as the reduction of basic taxes. For example, the VAT would be cut from 20% to 17%. In addition, the proposal envisions reducing the number of tax inspections of small businesses. Under the bill, such inspections could be carried out no oftener than once every three years. According to Mr. Azarov, an indisputable expert on tax issues in Ukraine, “The proposed changes will have a positive effect on society, namely, the growth of investments and consumption at the expense of the enterprises’ residual funds.”
The party leadership is confident the bill will be supported by most people’s deputies, especially taking into account that the current session is unlikely to finally pass the Tax Code. In particular, head of the Solidarity parliamentary group and Party of the Regions Deputy Chairman Petro Poroshenko believes, “Today, with the parliamentary majority in disarray,” it will be very difficult to coordinate the viewpoints of the Verkhovna Rada fractions on the basic points of tax reform.
The initiative does not appear accidental. Its program, adopted at last March’s congress, sets out that the party will work to reduce tax pressure on small and medium business. And, on the other hand, who better to reform the tax system than the tax administration chief. Incidentally, asked at the May 22 press conference (in the photo) by The Day ’s correspondent about who exactly, the Party of Regions or the tax people, initiated the bill, Mr. Azarov said somewhat abruptly that he does not suffer from schizophrenia. He therefore sees no reason why he should not take advantage of a situation in which he can use both the levers of his government office and his political persuasions.
