And ricochet at those they are supposed to support

In its last week of work, Verkhovna Rada adopted a law on imposing additional taxes for the Pension Fund: 5% from tobacco sales and imports, 1% from the sales and purchase of immovable property, and 6% on mobile phone services.

The imposition of this additional “exaction” (to use the word of an expert interviewed by The Day correspondent) was initiated by the Cabinet of Ministers which plans to earn, as a result, an annual UAH 400 million. Incidentally, this kind of tax was first imposed as early as last October. Since then, 1%, 3%, and UAH 100 off the purchase amount have been paid when buying hard currency, gold jewelry, and automobiles, respectively. At the expense of this innovation, the Pension Fund gained an additional UAH 400 million. To understand whether this is a little or a lot, let us note that pension arrears were UAH 2,175 million in late July, while the monthly needs of the pension agency (excluding the funds earmarked for debt payment) was UAH 903.9 million. Pension Fund Chairman Borys Zaichuk has also admitted the negligible effect of this action, noting that the money expected to be earned by means of the additional taxes is not sufficient to fully pay off pension arrears.

But while UAH 400 million is small change for the Pension Fund and will not solve the arrears problem, the exaction of this amount will deal a heavy blow on Businessmen and consumers. According to general manager of the Ukrainian Mobile Communications Joint Venture Martin Dirks, this kind of instability has resulted in a substantial drop in the development of the cellular telephone market, until recently one of the most dynamic sectors of the Ukrainian economy. The Ukrainian Association of Telecommunications Operators, which believes the imposition of an additional tax on mobile communication services is inadvisable, projects a 10% rise in rates. And this, Mr. Dirks continues, will cause the number of subscribers, the tax base and, accordingly, budget revenues to be reduced.

There are also some doubts in Parliament itself about the effectiveness of the new taxes. Thus, Chairman of the Subcommittee for Communications, Information Networks and Mail of the Construction, Transport and Communication Committee, Oleh Polishchuk said it was never explained why a tax of exactly 6% was being put on mobile communication services.

It looks as if the tobacco industry is going to vanish into thin air, which may happen largely owing to similar additional fees for the Pension Fund. Olha Yurchenko, director-general of the Ukrtiutiunprom Association, is especially worried over this mounting tax burden. In her opinion, if this continues, large investors will simply quit the Ukrainian market.

The real estate market was a bit more lucky. The lawmakers left a loophole: individuals, who are on a housing waiting list or acquire accommodation for the first time, are exempt from the 1% tax when they buy an apartment. As forecast by an expert at one of the brokerages working for the Kyiv Universal Exchange, the number of such privileged person will soon rise substantially.

Virtually all the experts interviewed pointed out: if the pressure on entrepreneurs were only confined to the imposition of additional taxes for the Pension Fund, it would be only half the trouble. But unfortunately, whatever market you take, the “bouquet” of all kinds of the already imposed and projected taxes, duties, etc., is so lush that all we can do is merely accept it as inevitable. It will be recalled that the cancellation of joint venture privileges was also attributed to good intentions. But, as The Day 's experts maintain, this decision became one of the reasons why oil product supplies to Ukraine were cut back. This resulted in a steep rise of gasoline prices (if you manage, of course, to find a filling station which still pumps gas) followed by similar rises in the price of goods, including necessities.