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Ukrainian government proposes budget decentralization, tax reform

August 06, 2014, 16:29 UTC+3 KIEV

In particular, 22 classic taxes on entrepreneurs would be reduced to nine

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Ukrainian Prime Minister Arseniy Yatsenyuk

Ukrainian Prime Minister Arseniy Yatsenyuk

© ITAR-TASS/Maxim Nikitin

KIEV, August 06. /ITAR-TASS/. Ukrainian government proposes budget decentralization and transferring real estate tax and unified tax collection to local budgets, Ukrainian Prime Minister Arseniy Yatsenyuk said on Wednesday. 

The draft law suggested budget autonomy of the local authorities, he added.

“We’ll grant them authority and resources but will demand responsibility. ‘The better you work, the more you gain’ will be the new principle,” Prime Minister said.

The cabinet would insist on amendments to the Constitution, he said.

“There are plenty of economic models. In the Ukrainian model, everybody gets the fish. We suggest a model where everybody has a rod with a big hook to catch big and high-quality fish,” Yatsenyuk said.


 A complex tax system reform plan was a priority measure, he added. The current 22 taxes on entrepreneurs should be reduced to nine. Fees for some kinds of business, parking fees, tourist, winemaking, beekeeping and hop growing fees would be cut, he added.

The cabinet also decided to unify wealth tax, fuel tax and fee for the first car and introduce an additional real estate tax that will go to local budgets along with the unified tax.

Yatsenyuk proposed unification of fiscal and financial accounting. The cabinet will also revise approach to income tax as tax burden on income in Ukraine is 20% heavier than elsewhere in Europe.

“The average pay in Ukraine is 3,600 hryvnias, or about $300. Total payments to the budget are 2,162 hryvnias. The model proposed will reduce them by almost 700 hryvnias,” Prime Minister said. The fair system will be where wealthier people pay more, which “will close the budget hole for social funds”.

A financial investigation service is planned to replace the tax police and four other state authorities dealing with business checks.

The government will discuss the new “optimal economic and tax model” within a month and present the final project early in September.

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