People’s deputy of the Samopomich Union faction, a member of the Verkhovna Rada Committee on Taxation and Customs Policy – about the pros and cons of changes to the Tax Code and the state budget for 2017.
Every law, including the main financial document of the state, is a result of a compromise and of taking into account the proposals of different political forces, which are not always pro-state ones and don’t always care about people.
And the bill №5368 on changes to the Tax Code is a bright example of such a compromise. It contains both positive for the taxpayers norms and drawbacks, among which:
– Lack of political will regarding the transfer of electronic registries and databases of the State Fiscal Service to the Ministry of Finance;
– Introduction of 2% rent for the wells which are difficult of access, while there is no clear definition of which wells are the difficult to access ones;
– Changes to the taxation of the lottery business, which will make the revenues from this lucrative industry three times as little;
– Creation of a legal justification for non-payment or installment payment of the import VAT for certain types of business;
– Some of the tax issues that relate to the occupied territories and the line of contact. Apart from the positive regulations on the exemption from the real estate tax and the land fee (for such a property may be destroyed, damaged, or people have no access to it and do not use their property or their land), there are regulations on the taxpayers who are carrying out their activities in the occupied territories and are likely to be financing the terrorists.
This may be the first warning signal of the beginning of economic reintegration.
Therefore, much as Samopomich would like to support the positive regulations, given the above-mentioned disadvantages, the faction did not vote for the bill №5368 on changes to the Tax Code.
In addition, I would like to underscore three things which I perceive as the major disadvantages of the adopted budget for 2017:
- The defence budget. Unfortunately, the defence budget remains closed, and the law doesn’t provide for any measures of civil control over the expenditures. We are told that the issue of the defence budget had been resolved by the Council of National Security, which doesn’t include MPs. According to the law, the Ministry of Finance just has to receive the figure suggested by the Council of National Security and mention it in the defence budget. Therefore, it is important to have public and parliamentary control, at least over those purchases that can be made public.
- The results of raising the minimum wage to 3,200 hryvnias. In most cases, due to amendments introduced by Samopomich among other things, we eliminated the negative effects of this increase on the growth of certain payments or indicators, such as court fees or fines. However, the downside is the fact that the amendments against the growth of the single tax for the self-employed individuals of the 2nd group were rejected.
- Security forces budget. Of course, the state should fund them well so that they perform the law enforcement functions. But we see no tangible results of the police and the prosecutor’s office reform. Nevertheless, the purchase of luxury cars at high prices is funded from the budget.
Now about positive changes.
Education. The budget 2017 pays due attention to education, which is extremely important for me as a mother of two school-age children. The average teacher salary will make up 6,000 hryvnias. This will solve the problem of human resources in public schools, where nobody wants to work for 3,000 hryvnias. At our school teachers are looking forward to the planned increase of their salaries by 50%. The only thing they fear is that the dollar rate and, accordingly, the prices will grow. And in the end they will receive and lose at the same time. The budget factors in one dollar at the rate of 27.2 hryvnias. The issue of vocational education financing is also resolved; these are the regional state administrations that are responsible for it and, therefore, vocational education financing is guaranteed by the funds from the state budget. Teachers with no category will receive from 4,000 to 5,000 hryvnias.
Medicine. The growth of doctors’ fees by 36.3%. The average salary of a doctor will be about 6,000 hryvnias. For the first time in 10 years, 5.90 billion hryvnias are provided for the centralized procurement of medicines for the severely ill – cancer patients, patients with AIDS and tuberculosis. First steps are taken towards the reform of health care financing in accordance with the medical services provided, instead of the number of beds in a hospital.
Roads. For the first time a Road Fund is created, with 14.2 billion hryvnias allocated for it. This is the money guaranteed by the state for building roads that will be distributed throughout the year, instead of being spent at the last second through corruption schemes of “Ukravtodor”.
Agricultural producers. The budget 2017 stipulates that more than 4 billion hryvnias of the VAT paid by agricultural producers of meat, milk, poultry, fruits and vegetables will be automatically returned to them in the next reporting period. In addition, the budget provides 300 million for a program of credit rates compensation to farmers; 500 million for an agricultural engineering support program (tractors and other equipment); 700 million for a program of the state credit guarantee; 500 million for a grant for milk producers in the private sector through the equipment for collecting milk. This will improve the quality of milk and, accordingly, will influence the price of its implementation.
Customs and the fight against contraband.
In order to close the “loopholes” at the customs the state must provide all customs posts with scanners, scales, and other means of technical inspection. Electronic devices will make the customs control more quick and efficient. The budget provides funding for these programs. For the fight with the implementation of the smuggled goods inside the country first steps have been made in terms of introduction of cash registers for the trade of the most expensive commodities – equipment and electronics – since large retail networks tend to evade taxes and sell contraband goods.
Administration of taxes.
There will be a single register of VAT refund operating in accordance with the chronology of the applications filed, with no involvement of the State Fiscal Service. From now on a tax bill registered in the electronic administration system will be a sufficient reason for the recognition of a tax credit.
This means that tax officials will no longer be able to find fault with the details of the tax bill and the supply chain of goods. There will be an electronic taxpayer account, a register of tax advisory services on the website of the State Fiscal Service. In addition, the Fiscal Service is prohibited to terminate the contract for the digital signature.
Also the Pension Fund tax on the purchase of foreign currency is canceled.
An allowance on the import of gas for “Naftogaz” is removed, and this eliminates the grounds for abuse of its monopolistic position on the market. This will promote the development of the local gas market.
The grounds for abuses at the gas stations related to the payment of the excise duty on the retail sale of fuel are removed. The retail excise is eliminated and it is attached to the excise tax on import and production of fuel. The amendment of Samopomich was taken into account and the budgets of cities, villages, towns and the association of territorial communities will receive the revenues from this excise duty automatically at the level of not less than in 2016 for the needs of their residents.
Thus, I think that the pros of the state budget for 2017 outweigh the above-mentioned cons.