A. Yatseniuk: Government considers necessary to introduce wealth tax

The Prime Minister Arsenii Yatseniuk informed in Parliament on Thursday, March 27, while submitting the draft laws on preventing financial catastrophe and creating prerequisites for the economic growth in Ukraine, on making changes to the State Budget for 2014.

He stressed the Government viewed as necessary to impose “a tax on wealth, in fact”. Among the variants of taxation considered by the Government has been taxes levied on deposit interest rates: “Not just the deposits proper but exceptionally on deposit interests”.

The Head of Government stressed passive income is taxed in all the EU member countries. To compare Ukraine “a bank pays a passive income on 25% annual rates and none pays any taxes from this income”.  

“Moreover, if a deposit interest rate is 25%, a real rate in the economy will be 40%, as the bank must earn on something. It is inadmissible,” the Head of Government added.

At the same time, with the view to the current conditions the Government has approved a decision in the current year not to introduce taxation of incomes from bank deposits, Arsenii Yatseniuk informed.  

However, the Cabinet of Ministers suggests to introduce a progressive scale for the incomes of the citizens: “The one who earns over UAH 300 thousand will pay tax worth 20%, while the one who earns over UAH 500 thousand  - 25% respectively”.

Herefrom, taxation will be imposed towards 300 thousand citizens who have financing resource which makes up 60% of overall assets of Ukraine, A. Yatseniuk emphasized.

“1.7% rich Ukrainians must pay taxes so that 98% Ukrainians could feel the time of social justice has come,” he declared.

Apart from that, Arsenii Yatseniuk informed that the Government suggests raising of excise tax rates for alcohol and tobacco goods. “I consider it won’t affect creating of working places, while the scale of beer drinking in the country is over-the-top, the amount of smoked cigarettes and actually destroyed health of Ukrainians as a result is incredible”.  

He explained after raising of the excise tax rates a bottle of beer, that is now UAH 8, will cost UAH 8.50, a package of cigarettes will up from UAH 15 to 16, an average price of a bottle of vodka will grow from UAH 32 to UAH 35.

Moreover, the Head of Government accentuated the Cabinet of Ministers had adopted a decision in the current year to avoid transition of the agro-industrial complex to the general system of VAT taxation.

At the same time, the Government accounting for the proposal of the European Business Association, American Chamber of Commerce and a set of entrepreneur associations is planning to introduce a value added tax on grain export.  

He reminded there had been “a bare earning” on this market: “Grain was purchased from villagers, let it through their own shell company, where 20% were inflated and didn’t flow into the budget, and afterwards through a large trader it was sent to the customs, declared and exported, as a result additional 20% was received from the budget”.  

According to Arsenii Yatseniuk, the funds didn’t flow to the pageants but to the pockets of an exporting company: “Hence we suggest introducing VAT for grain export. We shouldn’t fool pageants”.