Ukrainian Tax Chief Laments Administration's Failure To Reform

by Tatiana Smolenska, Tax-News.com, Moscow

10 August 2001

Mykola Azarov, Chairman of the Ukrainian State Tax Administration and the head of the Party of Regions, a coalition of five small, centre-right parties, recently denied that he was intending to use his administrative position to advantage in the upcoming Ukrainian elections, and attacked established power structures for preventing adoption of a new tax code which, he says, could have stimulated economic growth.

It is a sad fact that Ukraine has been dominated for the last ten years by criminal, or anyway, corrupt interests linked to the 'financial-industrial complex' and with the ability to prevent reforms which would damage its interests. Recently-resigned Prime Minister Viktor Yushenko, previously Chairman of the Central Bank, was forced from office when he became too threatening to the so-called 'mafia' (they killed his patron Vadim Hetman), but Mr Azarov and a number of other reformist ministers remain in post, keeping hopes alive that Ukraine may yet pick its way out of the abyss of debt and deceit into which it has fallen.

Azarov told a recent television interviewer that the history of the tax code represented a failure of all branches of power. 'Three years ago,' he said, 'on 1 September 1998, at a Cabinet sitting I handed out a draft of the new code with all calculations to the then prime minister, Valeriy Pustovoytenko and the new parliament. Who prevented the Supreme Council from considering it all these years? Later, there appeared five alternative drafts based on one thing in common: unwillingness to make order in the taxation field.'

'According to the constitution,' said Mr Azarov, 'the 2002 budget should be presented to the parliament on 15 August, while now we can form it using the old taxation base only.'

Asked whether Ukraine should adopt an amnesty for illicit capital, exempting it from taxation, as has been successfully carried out in Kazakhstan, the Minister said:

' You should ask this question to someone else. We developed a draft law for the president two years ago and it was sent on to the Supreme Council as a law. This document has been lost somewhere. It is hard for me to say what prevents adoption of this law. Apparently, everybody supports the law; however, they fail to conduct a vote on it. I think that many people do not like a provision stipulating further control over income and expenses after shadow capital is legalized. That is why the law has been "in the air". '

Poor old Ukraine. It has screwed up more chances to reform in the last ten years than many of its poor have had hot dinners. Maybe this election will see a clean, determined legislature that will cut through the crud that stops it realising its potential - but don't hold your breath.

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