Almost every business owner in Ukraine can share stories of extortion, corruption and excessive regulation when describing their relations with tax collectors. But few know how to promote their interests at the grassroots level.
The good news is that there are plenty of success stories from around the world from which they can draw inspiration. Global taxpayer advocacy movements have shown that in order to establish a fair system of taxation, the business community has to be deeply involved in policymaking.
Starting from its founding, the United States has such a tradition of tax advocacy. “No taxation without representation” was a slogan that originated in the mid-18th century and was the rallying cry of the American colonists – and the tax issue one of the main causes of the American Revolution.
In today’s United States, an abundance of non-profit groups promote various tax issues like lowering certain rates or more transparent government spending.
Among them are Americans for Tax Reform, Americans for Fair Taxation, Citizens for Tax Justice, National Taxpayers Union – and more. Some have memberships varying from hundreds of thousands to a million members. There is also the Taxpayer Advocate Service network, ombudsmen who ensure that taxpayers are treated fairly by the Internal Revenue Service.
Now a new Ukrainian taxpayer advocacy group, the Ukrainian Economic Freedoms Foundation, wants to follow the U.S. model. Founded on Nov. 20, the group is currently run by three people, and is hoping new members will join soon. The co-founder, Maryan Zablotskyy, said the group would focus on lobbying for lower taxes, reducing bureaucracy and promoting taxpayer awareness.
The group on Dec. 10 held an event in Kyiv to mark its official launch, which was attended by tax advocacy group representatives from the United States, Italy and Lithuania. Event attendees held seminars and gave speeches to pass their experience in promoting economic freedoms.
David Williams, the president of the American Taxpayer Alliance, who was at the group’s launch event, told the Kyiv Post that tax advocacy groups such as the one just launched in Kyiv are essential to put pressure on officials to enact change.
“Elected officials change not because they want to – they change because they have too,” Williams said. The American Taxpayer Alliance has 150,000 members and a network of donors. Like the Ukrainian Economic Freedoms Foundation, three people run Williams’ group. Most of the group’s members are fiscally conservative Americans aged around 60.
“(But) I think it might be different in this country, where the younger generation actually may be more active in pursuing these reforms,” Williams said. “And this is why I’m affiliated with this Ukrainian Economic Freedoms Foundation. It’s because they’re going to be very active in lobbying and advocating on behalf of taxpayers.”
Williams said that the group lobbies officials by making in-person visits, and by sending emails or letters. Another component of the non-profit’s work is to research wasteful government spending and educate taxpayers on tax abuses.
The alliance also urges taxpayers to contact their elected officials and voice their opinion on any new tax hikes or ineffective government spending. “We made some very powerful members of Congress change the way they spend money because we embarrass them about the corruption they’re engaged in,” Williams said.
Another group, Americans for Tax Reform, got written promises from legislators saying they oppose tax increases. Called the Taxpayer Protection Pledge, nearly 1,400 elected officials have signed it.
Existing Ukrainian taxpayer advocacy groups are of course much smaller than their U.S. counterparts. The biggest one is the Ukrainian Taxpayers Association. It has 7,000 members, mainly business owners, who employ 3.2 million people.
“Due to the influence of the socialistic, Soviet legacy, people until now have not been very active in protecting the rights of taxpayers,” Ukrainian Taxpayers Association president Grigol Katamadze told the Kyiv Post.
Having an office in each Ukrainian region, the group aims to protect the rights and lawful interests of taxpayers and improve the business climate, while offering consulting services to its members. It often gets its message out through media campaigns.
According to the most recent Heritage Foundation Index, Ukraine is the 162nd freest economy in the world out of 178 countries ranked. “However, there is no difference between Ukrainian and other taxpayers around the world,” Willams said. “Despite cultural differences, people want honesty and transparency out of their governments.”
Kyiv Post writer Olena Savchuk can be reached at [email protected]
