New tax code could be adopted in mid-December

Having voted down the government’s bill on the 2002 budget in its second reading, the people’s deputies have at last passed the Civil and Economic Codes in the third reading and voted on the Tax Code in the second reading on November 29. “I am pleased to note that, despite the pre-election battles raging within our parliament, the people’s deputies displayed civic attitude, wisdom and a well-balanced approach when voting on the bills so vital for this country,” Verkhovna Rada First Vice Speaker Viktor MEDVEDCHUK said afterward.

244 out of the 415 deputies registered in the hall supported the draft Tax Code in the second reading and decided to put it to an article-by-article vote in the third reading. The resolution instructed the Financial and Banking Committee to modify the draft, taking into account the observations made, and submit it for the third reading by December 6. Moreover, given the critical importance of the Tax Code in raising revenue, Verkhovna Rada decided that the bill be discussed without fail by the Budget Committee. As Serhiy TERIOKHIN, deputy chairman of the Financial and Banking Committee, told The Day, “The draft Tax Code is expected to be voted on before December 13.” In his view, the deputies will have to make about 7500 amendments by then. The Tax Code will be read for the third time following a special debate procedure.

It should be noted that the proposed new Tax Code provides not only for combining the current system of taxes and duties in one document but also reducing some tax rates like dropping the income tax on individuals from 40% to 25% and that on dividends from 30% to 15%. The code, now awaiting its third reading, also proposes that taxpayers be exempt from local taxes, which are not particularly important to local budgets and are usually not collected.

“The new Tax Code envisions more liberal rates: for example, we want to reduce earnings from the tax on individual profits by about 5 billion hryvnias,” Deputy Teriokhin said. In his words, most deputies do not support the cabinet proposal to institute a tax on corporate property. “If any new taxes are to be instituted, there will be a housing tax with tremendous social exemptions such that only about one percent of our citizens will have to pay it,” he claims. Yet, it is too early to come to any conclusions. There are too many complaints about the bill from the cabinet, State Tax Administration, and the people’s deputies themselves. According to Mr. Medvedchuk, this will take “not less than a day or two,” with even the proposals rejected by the government and committee to be voted on.