At the end of last week the Verkhovna Rada adopted at the second reading by a majority vote the draft budget for 2012. Regardless of the fact that the fractions of BYuT-Batkivshchyna and NU-NS opposed this bill, the parliament gave two weeks to the government in order to finalize it for the second reading considering the conclusions and remarks of the budget committee.
The budget draft provides for the income of over 337.5 billion hryvnias and the deficit of 24.13 billion hryvnias (1.6 percent of GDP), the growth of real GDP by 5 percent and 16.6 percent of the nominal GDP (up to 1.505 trillion hryvnias). The numbers look impressive. In the budget of 2011 (subject to changes) the income is about 299.2 billion hryvnias and the utmost deficit is 35.3 billion hryvnias. However, according to the authors, the part of GDP redistribution through the consolidated budget in 2012 will make 28.5 percent which is the evidence of the significant fiscal pressure upon the economy.
According to the head of the parliamentary fraction of the Party of Regions Oleksandr Yefremov, the draft budget received 1,350 amendments during the discussion. These remarks are enough for one more state budget, they total over 360 billion hryvnias. It is clear that not all of them can be considered. However, Yefremov and his fraction will insist that the Ministry of Regional Development gives significant funds to the regions so that the latter could resolve the problems that have accumulated there. “These funds must be accumulated in order to resolve the problems of buildings, basements and pavements reparation, and so on,” the leader of the governmental fraction suggests, “6 to 8 billion hryvnias have to be allocated for these purposes.”
Yefremov also asserts that “social payments are not going to be reduced for any categories. All the payments will not decrease as compared to the last year subject to the inflation processes in the country. In general, we are going to increase all the payments.” “Many of my colleagues either have not read the draft budget or change its numbers in purpose and claim that the quality of a number of budget positions has worsened,” the press-office of the Party of Regions quotes Yefremov’s words.
The head of the parliamentary budget committee Valerii Baranov (the fraction of the People’s Party) believes that the budget of the country for 2012 “has risks concerning the security of the planned income rates, earnings from the state property privatization and state loans… in particular, because of the instable foreign financial markets and the threat of the second wave of the global financial crisis.” The draft budget for 2012 provides for the earnings from privatization of 10 billion hryvnias. However, according to Baranov, the project of the state privatization program has not been brought to the Parliament yet.
The head of the budget committee also remarked that when working on the budget for 2012 “it is time to display the political will concerning the adoption of the selective social support and the gradual monetization of the social benefits... Obviously, it is impossible to fulfill all the commitments.”
However, it appears that the governing parties will try not to draw especial attention to the social peculiarities of the new budget.
The disgraced Federation of Trade Unions of Ukraine has undertaken the corresponding function. Last Friday it held a briefing for journalists with a scary name “State budget 2012: the Ukrainian neo-liberal serfdom.” Do you think it is an exaggeration? However, the figures FTU relies on are not subject to emotions. Thus, when the social partnership parties negotiated the draft budget the governmental party remarked that the suggestions of the trade unions for the budget make 177.2 billion hryvnias and the suggestions from the employers make 85.5 billion. It is significant that, according to the Ministry of Finance, in the draft budget presented to the Parliament slightly over 84.2 billion hryvnias have been found to meet the trades unions’ requirements which is twice less than they requested. However, over 61 billion hryvnias (71 percent of the money requested) were found for the employers. So, who is the serf?
However, the trade unions see the positive sides of the draft budget. FTU remarks that it was timely presented to the Parliament, provides more significant expenses for the support of the national production (agriculture, housing and communal sector and construction) and funding of the local budgets that in 2012 will additionally receive 5.6 billion hryvnias for the fulfillment of their functions including investment. The trade unions are satisfied that the draft budget provides for the social payments increase by 9 to 11 percent whereas the expected rate of inflation is 7.9 percent. They have also positively reacted to the governmental forecast of the budget deficit reduction.
However, FTU remarks that in general the draft budget 2012 does not provide the achievement of the Millennium Goals of poverty eradication and does not aim at fulfillment of the tasks set by the Ukrainian president to approach to the top-20 most developed countries of the world. The main complaint of the trade unions for the government that has prepared the draft budget is that, as previously, the subsistence minimum for the main categories has been calculated regardless of the new food sets, nonfoods and services and the personal income tax. The trade unions believe that as a result, the size of the subsistence minimum for working people and, consequently, the size of the minimum wage adopted by the Verkhovna Rada is lower than the real subsistence minimum by a third. It automatically leads to the reduction of the pay level, governmental social support and pensions. Besides, the draft budget still provides for the “security level for the subsistence minimum” though last March the President Yanukovych insisted on the necessity to liquidate this term in Ukraine. The state must completely provide its citizens with at least the subsistence minimum.
The Deputy Head of FTU Serhii Kondriuk thinks that the reason of the social inequality displayed in the budget is hidden in the taxation. “In the Ukrainian legislation wealthy people just drop out from the taxation system because they do not get their share of the national wealth from the salary. They get incomes from dividends subject to a very low rate of tax (only five percent) and from the deposits in their own banks that are not taxable in Ukraine at all.” In his opinion, earned incomes in Ukraine are subject to higher taxation rates than the unearned ones. Kondriuk gives an example of the US whose president Barack Obama is going to introduce a special tax for the people earning over a million dollars a year. According to the trade-union official, there are similar norms in France and Spain. The deputy head of FTU asserts that the Ukrainian oligarchs like money 25 times more than wealthy people in the developed countries. “Thus, the budget 2012 pursues the governmental policy increasing the chasm between poor and wealthy people in our country,” Kondriuk emphasized.
