Ukraine’s civic groups highlight three priorities of tax reform: better conditions for economic development, defeat of corruption, decrease in tax pressure

Ukraine’s civic groups highlight three priorities of tax reform: better conditions for economic development, defeat of corruption, decrease in tax pressure
August 25, 2015.

Kyiv, 25 August, 2015. “Tax reform aims to prevent economic downturn and form competitive tax conditions for business development. To achieve this, tax pressure on payroll needs to be decreased, a simplified system of taxation needs to be preserved, while relations between the taxpayers and the state need to be built based on mutual respect and trust,” stated the representatives of the leading civic organizations at a press briefing at Ukraine Crisis Media Center as part of the Ukraine Reforms Communications Taskforce project.

“Over a year and a half has passed since the Revolution of Dignity, and society and businesses have yet to receive a clear signal from authorities regarding what economic model is being set up in Ukraine. Tax reform is such a signal. It gives a clear answer to the question of what country we are building,” noted Valeriy Pekar, Coordinator of the civic platform New Country.

The National Forum on Tax Reform took place in Kyiv on August 20, and was initiated by civil society organizations and teams of experts who developed their vision of the tax reform on a volunteer basis. Civil society developed a total of 12 models, which were melded into one at the aforementioned forum. Thus, civil society has formed their unified position on tax reform and is ready to present it at the upcoming session of the National Council for Reforms on September 3.

Economist Volodymyr Dubrovsky, expert at the Reanimation Package of Reforms (RPR), commented on civil society’s unified vision for tax reform, noting that the proposed changes need to negate the influence of subjective factors when taxes are collected. “We invented a way or working in which an entrepreneur will not need to know his/her tax inspector by face, he/she will just be paying taxes according to the law and will not be bothered by anything else. They will not be repeatedly disturbed by requests to make advance payments of taxes. On the other hand, we realize that there needs to be compensation for the budget in case tax pressure is decreased. And we have actual proposals for this,” noted Dubrovsky.

Civil society activists suggest introducing a norm into the Constitution that would limit the level of re-distribution of the country’s GDP through public finance to level of 35%. According to Illia Neskhodovsky, Chief Expert of RPR’s Tax Reform group, the main innovations that helped unify civil society include the decrease of the tax burden on the payroll by 20%, the introduction of taxation of the distributed profit only as well as the preservation of the simplified tax system. “Tax authorities need to be accountable for damages caused to business. At the moment, such accountability is purely formal. It is very important to introduce electronic services, in particular, a fully functional e-cabinet for each taxpayer. Everything needs to be transparent and open,” emphasized Neskhodovsky.

The press briefing participants voiced their concerns with the fact that alternative models of the tax reform from the Finance Ministry of Ukraine and respective committee of the Verkhovna Rada are being prepared behind the closed doors. According to the activists, these actions contradict the declared principles of a search for a joint decision on tax system reform in the country that is open to the public.