Tetiana Ostrikova: Government’s new fiscal fantasies

The Cabinet of Ministers offers the Verkhovna Rada to increase the tax base of the unified social tax in the amount of 22% from 15 minimum wages (55.8 thousand hryvnias) to 25 (104.3 thousand hryvnias), and also introduce a regressive UST contributions model.

According to MP Tetiana Ostrikova, the government’s initiative, which was approved yesterday at a meeting of the Cabinet of Ministers, stipulates that company directors should now receive at least two minimum wages per month and, accordingly, pay at least two minimum USTs.

“Business is shocked again! Those who pay officially declared salaries, will now pay more UST. Presently, if the salary exceeds 62 thousand hryvnias, then 22% of UST is charged only up to this amount, for everything that exceeds it – UST is not charged. The government suggests canceling this. 22% will be charged from the salaries up to 104 thousand hryvnias, and whatever is above that figure will be also charged, but a smaller percentage.”

The Minister of Social Policy Oleksandr Reva suggests strengthening the responsibility for non-payment of the unified social tax. Tetiana Ostrikova comments on this.

“Those who did not close their inactive “individual entrepreneur” status, when the compulsory payment of UST was introduced, may all of a sudden get a ban on going abroad, a ban on driving, etc., until the debt is paid.”

According to the estimates of the Ministry of Social Policy, additional revenues to the budget from such measures can amount to up to 10 billion hryvnias, which will be sent to the Pension Fund. But how will it look in reality? Tetiana Ostrikova says the following, “This is how the government is patching up the “holes” in the Pension Fund. The Minister of Social Policy says that all this will give 10 billion hryvnias. That is, 12 million pensioners will be able to additionally receive 69 hryvnias 44 kopiykas a month”.

“This case clearly demonstrates that there are no incentives for entrepreneurs and economic growth in the 2019 budget. The authorities did not manage to fill the budget at the expense of terminating the illegal schemes at the customs. Therefore, such fiscal fantasies have appeared. Such initiatives are harmful to the bona fide business and should be eliminated,” the deputy concludes.

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