Tax Double Standards

In particular, according to Mr. Mitiukov, not adopting legislation on taxing immovable property, supplementing the number of local taxes, on personal income taxes, capital gains, profits on securities and real estate transactions, together cost the national budget 1.5-2 billion hryvnias annually.

While the minister had much to say about various specific taxes and figures, he failed to make public the government's basic approach to tax policy: how to structure the tax system or how the Finance Ministry and Tax Service should work in order to foster the growth of operating enterprises, to aid development of the service sector, and to fill budget coffers.

 The piquant nature of the discussion of the government's tax activity in Verkhovna Rada was doubtless augmented by that over the holidays the Cabinet of Ministers approved a projected presidential edict on gradual increases beginning July 1 in the wages and salaries paid militia workers (police) but not providing for raises to those working in executive bodies and local governments.

First Deputy Finance Minister Petro Hermanchuk stated that the measure will make it necessary to find an additional 235 million hryvnias for the budget annually or 19 million per month.

Lawmakers still recall the President's veto of Parliament's bill to give one-time assistance to World War II veterans before Victory Day, which the President justified by citing inadequate revenues. People's Deputy Serhiy Teriokhin calls this an "economic double standard. One can cite a whole series of cases when the executive has been tricky. Today we in Verkhovna Rada asked the government where the money is from the 10% tax on depreciation paid by enterprises. The answer was a half-truth: in industry and agriculture. This is a half-truth because part of the money was spent on preparing Leonid Kuchma's summit in Lviv to pay for chandeliers and carpets. And the price of this 10% tax has been that 54% of the enterprises paying it have become unprofitable."

Oleksandr Lavrynovych called the raises for the militia "a blatant and primitive attempt to buy its loyalty" in the coming presidential elections.