Arseniy Yatsenyuk: Government won't submit draft budget 2015 based on old tax law. VR should approve economic reform package

”Based on the current tax legislation, without carrying out a tax reform, reform of a single social tax and budget reform the Government will not submit the budget, as it means the budget of economic decline instead of stabilization,” emphasized the Prime Minister of Ukraine Arseniy Yatsenyuk during a session of the Cabinet of Ministers on Monday, September 15.

According to the PM, the Cabinet of Ministers has prepared two variants of the State Budget for 2015.

With regard to the bill elaborated grounded on the current tax law, Arseniy Yatsenyuk explained, having had several Gov’t sessions and meetings of working groups the position of the Government is as follows: “Without carrying out a tax reform, reform of a single social tax and budget reform the Government will not submit the budget.”

He informed that the Finance Ministry of Ukraine had received a commission to elaborate “a package of real economic reforms that are to become the basis for approving a new quality budget”.

The Prime Minister said that at its session the Government would consider this package of economic reforms, comprising several draft laws: "A new redaction of the tax changes, cardinally new system of imposing a single social tax, amendments to the Budget Code. These are cornerstones necessary to submit the fourth thoroughly calculated document - the Law of Ukraine "On the State budget of Ukraine for 2015", which is based solely on the package of economic and social reforms," he summed up.

Among the changes offered by the Government of Ukraine are cutting taxes from 22 to 9, bringing an income tax to comply with the European standard, “when it is paid according to the accounting report, instead of being paid on the desire of a tax inspector”.

Moreover, the Government suggests reducing a single social tax from 41% to 15% for the salary exceeding two minimum wages.

Regarding small and average businesses, according to Arseniy Yatseniuk, "anyone who receives income up to UAH 20 million a year, shall be exempted from all kinds of inspections and be imposed a twofold single tax on small business".

The Government also offers to hold local decentralization: "Regions ask for money - we give the resource to the regions. This is a real fiscal decentralization, which will enable the territories to work better and earn more".

"These tax changes contain dozens of additional innovations inside. Including single social tax. We frankly say, if we follow the way of deshadowing, if we reduce the tax rate, we increase the responsibility," he said.

Arseniy Yatsenyuk emphasized that the Government is ready to submit the draft budget on the tax basis, as the country needs reforms. He appealed to the Parliament on September 16 to support the Government's package of economic reforms: "Depending on what the Parliament support, we shall immediately submit the Law of Ukraine on the State Budget grounded on the new fiscal and budgetary basis".

“In other circumstances, the submission of the budget based on the current law is viewed unacceptable. The Government will never agree, in connection with the economic decline by almost 7%, which is caused by war waged by Russia against Ukraine, to cutting all social expenditures.

We have found counterbalance tools, we are aware how to make the budget a stable one,” Arseniy Yatsenyuk accentuated.

“And just with this aim the Parliament must vote for a package of economic, tax and budget reforms,” the PM urged.

Arseniy Yatsenyuk continued that the new budget-2015 must be endorsed by the incumbent Verkhovna Rada of Ukraine: "We lack time".

Summarizing the report, Arseniy Yatsenyuk said that the Government had two options: "The first was to change nothing, to submit the budget based on the non-efficient tax and budget systems with the declining economy, the budget also declining. We reject this offer”.

"Our reasonable and clear requirement. There is a package of reforms that are vital for the social, tax and budget sectors. We have worked on this package throughout three months. It is ready to be approved", - stressed the Head of Government.

"If anyone has something more effective – just show in the Parliament," he stressed.

Arseniy Yatsenyuk noted that although the economy is declining, this year the Government has not cut social expenditures: "We have left them stable”. According to him, if this reform package is endorsed, “we will experience a small increase up to 6%": "Things go better, the war ends, investments flow- so we’ll change the budget. The Government adheres to the principle of honesty and realism, reform and efficiency".

“Now it is the turn of the Parliament, and we expect a decision of Ukraine’s Parliament,” Arseniy Yatsenyuk stressed.