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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Expect more fleecing of our money

21 September, 1999 - 00:00

The government approved the draft state budget for next year at its latest session, with September 15 being, incidentally, the last day to submit the bill to Parliament.

Little information leaked from the Cabinet of Ministers premises where this fateful event was held in camera . But what we did manage to learn is worthy of not only being quoted. As a competent source in the government press service told us, there was no question of a budget surplus this time. Premier Valery Pustovoitenko said that the draft budget should incorporate increased social payments (the source claims the draft consolidated budget now envisions a 15%, 8%, and 4% rises in social security, health care, and public education spending, respectively). Moreover, Mr. Pustovoitenko is quoted as allegedly saying, “The draft budget takes account of the President of Ukraine's proposals about a considerable ( ! —Author ) increase in social payments. To these ends, REAL SUPPLEMENTAL SOURCES OF FINANCING (capitalized by the author) have been found, which will not be affected by unforeseen economic difficulties ( !? —Author ).” Our source does not know if the Prime Minister named these real sources. Simultaneously, the Cabinet press service claims, Minister of Finance Ihor Mitiukov spoke about increasing revenues in the consolidated budget to UAH 37.4 billion, i.e., by UAH 700 million, by means of local taxes, real estate tax ( P arliament has not yet adopted these innovations, but, according to the minister, they could raise local budget revenues by UAH 1.3 billion), privatization earnings (up to UAH 2.5 billion; this news caused shock and bewilderment at the State Property Fund which had only managed to collect about UAH 400 million by the beginning of September), dividends from the state- owned shares of privatized enterprises (we are likely to expect here an upsurge of shenanigans and new division of spheres of control), as well as rent, consular duties, and natural gas transit. On my part, I will add to this list of the expected budgetary feedbags the previously introduced supplementary (officially termed as temporary and experimental) sources of fleecing affluent citizens who, despite all governmental and presidential attempts, are still able to “practice the purchase and sale” of automobiles, gold jewelry, hard currency, and use mobile communication services.

As we see, the new draft budget again puts emphasis on those who pay taxes and duties. In addition, our source says, the Finance Minister pointed out that the draft budget had been calculated on the basis of the existing legislation which (even despite its bloodthirsty nature —Author ) “is unable to provide for full-scale revenues” (wage and salary arrears alone account today for about UAH 7 billion —Author ).

Without dwelling on the drafts of a new tax code (we have no strength left to do so!), let us look at the current relationship between law-abiding taxpayers and the law. Under this less than perfect law, a legitimately employed individual, in order to receive a take-home pay 502 hryvnias 70 kopecks, i.e., $109 (a monthly subsistence MINIMUM), s/he must earn a gross 630 hryvnias, from which the individual will pay a 111.55 hryvnia income tax, a 12.60 hryvnia (2%) Pension Fund contribution, 3.15 hryvnia unemployment insurance (0.5%), that is, a total of 127.3 hryvnias. But, in addition to the individual, his organization also pays taxes on his/her gross pay: 32% to the Pension Fund (UAH 201.60), 4% for social insurance (UAH 25.20), 1.5% for unemployment-related social insurance (UAH 9.45), i.e., UAH 236.25. Thus in order to earn today UAH 502, working in the non- shadow sector of the economy, one has pay taxes to the tune of UAH 363 a month! How are these 363 hryvnias paid by one who only earns a hundred dollars? Cash-strapped pensioners (whose plight is being manipulated ever so adroitly by those responsible for the ever-increasing public debt) do not get them, for pension arrears come today to about UAH 2 billion.

And, in general, There are so many pensioners that a working person has to give more than 30% of his/her monthly income toward their, as a rule, meager 50 hryvnia pensions. Finally, what happens to production in all sectors, the top-priority status of which is being trumpeted by the government? Where is it, if shore shelves are stocked with even Turkish-made socks? And, in general, how can one possibly protect the domestic producer without paying money to the domestic consumer? The question that arises here is: to protect for whom? And mobile phones? Who, as a rule, uses them? Yes, civil servants. And their ministries and agencies pay additional mobile communication duties, but, since their organizations belong to the public sector, the money again comes from the taxpayer's pocket. So who else wants to work legally? Anybody? But Mr. Kuchma, Mr. Pustovoitenko, and tax administration chief Azarov will again be indignant at and even resentful of this lack of civic zeal. But all this, mentioned and calculated under old legislation, is only the beginning of the long road to the shearing , for, as we recall, the Finance Minister said that the existing legislation “is unable to provide for full-scale revenues.” This is only the beginning.

INCIDENTALLY

Last Tuesday Parliament turned down the bill On Additional Measures to Pay Arrears on Pensions and Wages, and to Compensate the Citizens for Losses Resulting from Depreciation of Savings in Ukraine's Saving Banks and State Insurance Agencies that the President introduced on the same day he issued a corresponding decree. Hence his decree will not take effect on September 19. It will be recalled that the bill theoretically calls for the payment of wage and pension arrears, as well as compensation for the lost savings at Ukraine's saving banks and state insurance agencies to come from the privatization of state-run facilities.

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