Tax policy: alternative exists
The «Uspishna Kraina» party together with entrepreneurs and active part of civil society are working out new Tax Code during the forums. Why are we doing this?
We have carefully analysed the actions of the power, in particular, the Ministry of Finance. The conclusion is obvious: its actions are finishing off Ukrainian economy, which is weakened by crisis, stifling remains of entrepreneurial initiative.
In case of implementation of draftlaws, which were offered by the Ministry of Finance, investment attractiveness of the country will reach not just zero, but it will be measured in negative numbers. In other words, it will punch the bottom and start to fall into the depth.
For instance, according to the document of the department, in case of non-payment of taxes or fines by legal entities, fiscal service (without applying to court) – based on decision of the head or deputy – will exact it a.o. cash or bank accounts. It will lead to the fact that companies, which are in the red, will not be able to pay salaries, travel costs, pay for raw materials until tax debt is paid off. Such innovation from the government will drive the business into the shadows, make them to move to barter operations or result in bankruptcy.
There are “good” news for individuals. For instance, if a citizen was looking for one-off work due to despair, he would have to be registered in local authority or supervisory authority. In addition, he will be obliged to pay in advance tax in the amount of 10% of the minimum wage (it comes UAH 160 per month in 2017). Moreover, if Ukrainian is not able to do his own business (for any reason), the tax will not be refunded.
An alternative exists. However, the government is doing everything in order to prevent the sound of voice of people, who are dissatisfied with its policy. People, who are able to offer other reasonable solutions.
Forums of Entrepreneurs, which were organized by our party, have repeatedly been the object of attacks by extremist. Meanwhile, law enforcement agencies were lying idle.
We were inviting people to work together and to answer simple questions. How to stop living in poverty? How to provide people with an opportunity to earn a living? Which tax and regulatory policy of the state are really needed?
The authorities do not want to hear these questions and answers to them.
Wealthy people are free. There will be no need for them to sell the future of their country during elections for the sake of package of buckwheat or tiny increase in their pension for a couple of months.
It is beneficial to authorities to have the country, which is inhabited by poor and embittered people. They are an easy target for manipulation.
However, this is the road to nowhere. To the bankruptcy and disintegration of the country. To endless war and new deaths.
Nothing will be changed if the attitude towards those, who create national wealth (labours, entrepreneurs and employees), is changed.
What is the main difference between our offered policy and the actions of current power?
Our priority is interests of a person and entrepreneur. The second is interests of the state. There is a simple reason for such sequence. A state is a serving institution in regards of person, not vice versa.
Our main task – is to restore justice. People with small income should pay less. Oligarchs should become the main source of budget replenishment. The most important is that tax system should encourage rather than stifle entrepreneurial initiative at the level of small and medium-sized business.
How to achieve this?
First, it can be achieved through the decreasing tax rates. In our Tax Code we offer to reduce VAT – from 20% to 15%, profit tax – from 18% to 10%, payroll taxes (including Single Social Contribution) – from 41,5% to 25%.
Such measure will increase collections to the budget. It is not a paradox; it is a consistent pattern. There are several factors.
Liberalization of taxes always takes part of the economy out of the shadows. Decrease of rates will make expenses for tax evasion unprofitable. Significant part of business prefers to work in legal field rather than using of dubious schemes (in case of correct procedures of administration).
In addition, reduction of taxes – is a positive signal for investors. Both domestic and international. Such measure encourages the emergence of new taxpayers.
Growth of business activity has cumulative effect. Even if direct tax revenues remain at the same level or slightly rise, new workplaces and growth of purchasing power will lead to increase in other taxes and fees.
As a result, total revenues will be higher.
Second, simplified tax system should be remained and modified in accordance with real needs of business.
Nowadays, the IMF requires almost full elimination of simplified system due to the fact that small and medium-sized business is actively involved in concealment of income from taxation. This is true. The truth is that the majority of registered legal entities in Ukraine is involved in such schemes. However, if it involves oligarchs, do we really have a right to blame small business for its attempts to survive? Is it real excuse for breaking the system, which provides millions of Ukrainians with work in small business, in favour of creditors?
Third, non-interference is a great support of the state. The more the government detached from business – the more attractive tax system for entrepreneurs we have.
Concerning specific steps that we offer. A moratorium on inspections of new enterprises during three years together with strengthening of liability of tax employees for abuse of authority, including unauthorized and unscheduled inspections.
Fourth, the VAT rate for socially important goods should be 5%. It is not populism or lobbying of someone’s business interests.
What is socially important goods? It comes about the goods that are listed in government documents, which regulate living wage. A number of living wage (even underestimated in our country) is not random. It is calculated on the basis of a specific list of living essentials.
This list should be accessible for citizens, including in the context of price. In order to make price lower, we should reduce VAT.
We, as a society, will be able to provide people in need with guaranteed minimum on these grounds. No one is hungry in a civilized country (regardless of social status). No one should be hungry in Ukraine.
Fifth, we have to restore the force of the Law On transfer pricing. Authorities have eviscerated this law under the pressure of oligarchs. Capital outflow proceed with renewed vigour. The country cannot develop due to the fact that profit, which was made by its natural resources and labour of its citizens, is flowing out to the economy of Panama, Switzerland, Luxembourg, Cyprus, UK.
We are losing our time – the most valuable asset on market today.
We are losing people – those, who have left, died, been wounded, became unemployed, terminally ill due to low level of medicine. Thus, we are losing the most important asset of our economy, namely, human.
In terms of our principles of pragmatic patriotism, it comes about criminal profligacy. Things that we do not own are wasted, lost and stolen.
We squander things, which should work for the sake of next generation of Ukrainians. Things, which belong to them.
It is time to understand that we cannot blindly follow the path that leads to abyss. It’s time to see: an alternative exists. We are Ukrainians and we have a right to it.