Employer levies will drop and renationalization will end in post-Tymoshenko bid to reassure business
President Viktor Yushchenko Sept. 13 pledged mild tax reform starting next year, citing high taxes as the as the main drivers of corruption and Ukraine’s bustling shadow economy.
He also promised that his new government would not continue “unruly” privatization reviews, which he alleges were conducted by recently fired Prime Minister Yulia Tymoshenko.
Speaking to foreign journalists, Yushchenko said that his administration will sponsor legislation reducing the hefty so-called social taxes, which are equivalent to more than 30 percent of an employee’s wages and are paid by the employer.
“We are talking about the reduction of tax pressure by some Hr 6.5 billon annually, which equates to a roughly eight percent reduction in taxes overall,” he said.
“We should go to business and say we remember and understand that ‘shadowization’ is fueled by high taxes,” he said.
Yushchenko also said he would put an end to controversial privatization reviews conducted this year that have concerned investors and raised questions about property rights in Ukraine.
“We have ended the practice of reprivatization and any attempts to review property rights, and political repressions directed any business,” he said.
Citing experts, Yushchenko said the shadow economy shrank by five percent this year, but still accounts for about 40 percent of the economy.
“I am convinced that if there were less excesses [in the previous government’s privatization reviews and other areas,] the shadow economy would have shrunk much more,” he added.
Yushchenko was particularly critical of the controversial handling of the Nikopol Ferroalloy privatization review by the ousted Tymoshenko government.
Ukraine’s prized Kryvorizhstal steel mill, returned to state hands in connection with a privatization review case handled by Tymoshenko’s government, will be resold this year, he said.
“I will personally be present at the auction,” he said.
Tymoshenko earlier this year valued Kryvorizhstal at about $3 billion and Nikopol Ferroalloy at some $1 billion, pledging to resell them by year’s end via open, transparent tenders.
