Tax code approved ahead of the fight in Parliament around tariffs

Налоговый кодекс утвердили: впереди драка в Раде вокруг тарифов

In the Verkhovna Rada can occur situational unification around the abolition of tariffs for gas, which the government increased for the sake of the IMF loan – experts predict. At the same time, they note that tax law changes passed quietly, because the oligarchs will find a way to return the money.

To 6.3 billion UAH from the pockets of Ukrainians

The Verkhovna Rada has introduced changes to the Tax code, although the law prohibits to amend the tax law later than six months before the end of the calendar year.

The Chairman of the Verkhovna Rada Committee on taxation and customs policy Nina Southerner explained to the media: “This is a direct violation of the rules of the Tax code of the state. But this does not prevent stable operation of the business.”

Tax innovations include: increase from 1 July 2019 excise tax rates on tobacco products by 9%; the increase from 1 January 2019 the rates of environmental tax on emissions of carbon dioxide; an increase in rent rate for subsoil use for oil and for iron ore; the increase rate of rental fees for special use of forest resources by 50%.

The tax changes apply to international shipments. Exempt from value added tax the import into the customs territory of Ukraine of goods, total invoice value of which exceeds the equivalent of 100 euros for a single recipient – a natural person.

In addition, introduced new rules for monitoring and administrating fuel market and the market of alcohol. All companies that produce, store and sell fuel at wholesale and retail, will have to obtain a license for such activities.

To strengthen control over the circulation of fuel, the authorities intend to make excise warehouse each item dispensing gasoline, diesel fuel and gas – from wholesale depots to filling stations. They should all be equipped with devices for fixing the actual sales. The cost of the equipment, of course, included in the price of fuel for consumers.

However, a consultant of the Kiev Center of support and development of business of Alexander Tomashevskaya said that most of the changes to the Tax code, except tax parcels does not affect ordinary Ukrainians. They say that innovations mostly relate to administration and excise duties.

“For example, the paragraphs of the document on accounting of fuel. This is a long – standing lobby a dozen major players in the market who work “in white”. That is, everything goes in the fight against “grey” suppliers. These changes also affect the market of alcohol. In fact, all innovations are not particularly associated with taxes. This is an attempt to clear the market, or “to subjugate”, – quotes the Tomashevskaya media.

Anyway, from changes to the Tax code are waiting for the budget on an additional 6.3 billion hryvnia.

The leader of the Left forces of Ukraine Petro Symonenko believes that tax policy is working in the interests of the Ukrainian oligarchy, which will return the funds by reimbursement of VAT.

“For the oligarchs, the budget is the opportunity to receive in full the falsified value-added taxes that are returned when doing a certain activity. It is necessary to radically revise the tax policy and to fundamentally revise the VAT. We need to eliminate it and return the sales tax. Thus, it would be really assessed the real economic activity, and from it to receive these funds,” the politician said.

Tariffs: “a storm will seriously”

Taking the change of the Tax code without any problems, the authorities may encounter resistance on the issue of raising gas tariffs for the population, says political analyst Andrei Zolotarev.

He recalled that the parliamentary faction of “Batkivschyna”, the Radical party of Oleh Liashko, “the Opposition bloc” and “Samopomich” demands to cancel the decision of the Cabinet of Ministers of Ukraine about increase of gas prices for the population and to impose a moratorium on raising utility tariffs.

As reported, the Cabinet of Ministers raised the price of gas for households is 23.5%, starting from 1 November. Before November 1 of the population paid at the rate of 6.9 per cubic meter. The following bills will be made based on the price at 8.5 UAH per cubic meter.

The price should rise by another 40%. According to media reports, a price increase should occur in the spring of 2019 – then prices will increase by 15% in the fall of 2019. Note that the price range for industry is now 13,4-14,6 thousand UAH per thousand cubic meters. And, in the end, the consumer price should be compared with industrial ones.

The government explained the increasing demand of the International monetary Fund, without which the latter refuses to lend Ukraine. Prime Minister Vladimir Grollman said that if the price is not to raise, the country will default. In addition, the EU stated that the release of the new macro-financial assistance program cannot continue until the resumption of IMF lending.

Now authorities are awaiting the granting Ukraine macro-financial assistance from the European Union in the coming weeks.

“In the next couple of weeks will be allocated 500 million euros in macro-financial assistance, assistance will be provided (programme) cooperation with the International monetary Fund,” – said the President Poroshenko.

Experts are sounding the alarm: at the old gas price, the debt of the population on payment of housing services at the end of September amounted to 38.2 billion UAH 5.9 billion UAH more than it was in the beginning of the year. With increasing growth of the debt is inevitable, they say. Moreover, the Minister of social policy Andrei Reva has announced that from December 1, may increase tariffs for heat and hot water supply 16%.

Previously to turn off the heating in winter was forbidden, and now “Naftogaz of Ukraine” has received the right to 1 December 2018 to give instructions to regional gas companies to turn off the heating in winter because of the debts for the consumed gas.

Political analyst Andriy Zolotaryov notes that while each force individually, “sell themselves” on the fight against increase of tariffs is not fundamentally affect the situation. From the political strategy point of view of the opposition the subject is beneficial to stretch out the time, because it’s a winner and that will largely be built by the campaign. But considering the factor of elections in the Parliament may occur situational unification around the abolition of tariffs.

The plot, according to Zolotareva, promises intrigue, “especially because, according to sociology, Poroshenko failed to throw a negative on Groisman”.

“There is also the “majoritarian”, and they are amazingly opportunistic creatures. According to the regional press, they have famously trying to distance itself from tariff increases. Those wishing to merge in the election act of love for the people and take up effective voting. That’s when the default is not a default, but a storm will seriously fit tight buckle up,” he predicts.

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