Yesterday Parliament listened to the government's report on
tax policy. Finance Minister Viktor Mitiukov reiterated traditional executive
branch criticisms of the legislature both for the laws it has adopted
(in his opinion those on stabilizing the tax system and increasing
budgetary expenditures) and those it has not (approximately fifty bills
on tax changes sent Verkhovna Rada by the government).
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.






