By Vyacheslav YAKUBENKO, The Day
The Day has learned that the President is expected to soon sign
a decree on tax amnesty, and measures providing the return of capital from
outside Ukraine. In particular, the decree envisions that until the end
of 1999 any business or individual can declare to tax authorities any amount
of money earned in a non-criminal way. The declared funds will not be taxed
this year, and in 2000 will be included in the tax base. In fact, the tax
men, who actually prepared the draft decree, promise release from responsibility
and non-disclosure of declarations.
There is no doubt that the decree will have political implications.
The need for tax amnesty is stressed by all non-Leftist presidential candidates.
Now and then the International Monetary Fund and World Bank remind us about
it as well: "Why are you asking the millions if billions of Ukrainian money
are deposited in Western banks?" But this will hardly benefit the nation's
economy. In the last few years, businessmen have gotten used to continually
being betrayed by the state, which could freeze their bank accounts, intensify
tax pressure, fail to meet its obligations under government bonds, or impose
incredible penalties. There are few who want to litigate with the state.
Most often, entrepreneurs simply shut down their business, go into the
shadows, or seek to join the United Social Democrats (which is sometimes
the case). Because even after winning in court, one could be subject to
the so-called indirect tax base evaluating methods, according to Presidential
decree of August 7, 1998 and Cabinet resolution No. 1997. The decree allows
application of such methods in case accounting requirements are violated,
loss of accounting documents, and absence of records on real production
costs. However, the Cabinet has gone even further: now businessmen will
be taken in hand when they constantly show losses, when living standards
of enterprise managers and members of their families do not correspond
to their declared incomes, when taking out or repaying loans, increasing
the number of cash transactions, or having a relationship with fictitious
entities (while there is no law defying what that means exactly).
Also, according to the resolution it is possible to compare the incomes
of those engaged in similar business activities. Incidentally, nobody knows
who permitted the Cabinet to change the taxation mechanism determined by
tax legislation, in particular, by the law On the Taxation System. Anatoly
Kinakh, President of the Ukrainian Union of Industrialists and Entrepreneurs,
has found that the resolution violates two articles of the Constitution,
and ten articles of various laws, while the State Tax Administration reckons
that these methods will attract additionally Hr 1 to 1.5 billion to the
state budget. In the meantime, compared to the beginning of the year, arrears
of payments to the budget have grown 1.4 times to over Hr 13.5 billion.
Will businessmen believe that the state will not take their honestly declared
money, knowing where they put it?
At The Day's request, the decree was commented on by:
Valery KOLOMOITSEV, Deputy Chairman, Verkhovna Rada Budget Committee:
"I know Mykola Azarov as a very prudent man. If he prepared the draft
decree, it has been done professionally. A tax amnesty is not the main
point though. The economists have long ago proved that the optimal tax
volume is 37%. If it is higher or lower, the money goes into the shadows.
Thus, the most important is to establish a realistic tax system."
Volodymyr CHERNIAK, Ph.D. in economics:
"In itself, the idea of amnesty is not bad. If practically implemented,
it would make it easier for the economy, at any rate its essential segment,
to come out of the shadows. Such a policy helped to overcome an economic
crisis, for instance, in the Czech Republic. Of course, I mean the capital
in the 'gray' economy, not the criminal one. But I have serious doubts
that this idea could be implemented by means of a decree. Hopefully, both
legislative and executive branches will take care of this whole package
of measures. If this policy is consistent, there is a chance that in one
or two years the confidence of businessmen in the authorities will revive."
Oleksandr VOLKOV, Revival of the Regions faction:
"Some shadow capital is now circulating somewhere. What do the people
benefit from it? Not all of this money was earned illegally. The matter
is that until 1993 it was not prohibited to send assets abroad. And people
did so in order to protect their money from inflation. Now this money works
for other countries' economies. Won't it be only too correct to tell the
people: O.K., let bygones be bygones, bring your money back, and let it
work for our economy. Look to what lengths we have gone to in order to
get just $200-300 million, while about $15 billion of our funds are reposing
abroad."
Anatoly KARMAZIN, Chairman, Verkhovna Rada Committee for Legislative
Support to Law Enforcement and Corruption Control Activities:
"If such measures are ever implemented, they should be based exclusively
on laws. Presidential decrees are valid for three years after adopting
the Constitution. In several months they will be ineffective. Thus, someone
bringing his money back to Ukraine understands only too well that the next
day they will take him again by the hand and begin to ask him where, how,
and why questions. And they will send him to jail. Most probably, this
is a populist step by the President for the International Monetary Fund."
Viktor PYNZENYK, Ph.D. in economics:
"Nothing will come of this. Where will the returned money go? To banks
that could go bankrupt? To accounts that could be frozen? Nowhere else
in the world have they adopted such decrees; there they simply created
conditions under which money could be safely brought back."






