Well, what a start to the week in Ukraine. The week kicks off with the EU-Ukraine Summit in Brussels. Ukraine is given a carrot and stick by the EU towards visa free travel in the EU (or parts of it). It looks good for the Ukraine leadership, but the EU did not set any dates. Ukraine will be forced to make many changes before the EU leadership agrees to anything.
Meanwhile in Kyiv, thousands are on the streets protesting against the proposed new 'tax code' in Ukraine. The law has already been approved by parliament and is awaiting the signature of the President.
Ukraine certainly needs to introduce a new clear set of tax rules as the current system is one of the most complex and frustrating in the world. Businesses are subject to very close scrutiny by the 'Tax Police' and corruption among its employees is legendary. Moreover, the government needs...no MUST generate more income for the budget. But many people are objecting to the significant increases they will be required to pay from 1 Jan 2011. The current system offers an easy way for 'entrepreneurs' to pay tax. In Ukraine we have a system call the PE (Private Entrepreneur) system. It was designed to help small business owners to pay tax on a low level of turnover/profit. One of the forms of the PE system allows the tax payer to make a fixed payment of just UAH 200 (GBP16) each month. Provided the turnover of the business is less that UAH 300,000 (GBP 24000) per year.
If we had such a system in the United Kingdom, there would be thousands of people on the streets jumping for joy.
The new tax code (By the way no one outside government has been allowed to see it yet, so everything is based on leaks and inside information) proposes to increase the PE tax payments by three times plus a fixed payment to the governemnt pension fund. The total after all increases would be about UAH 840 (GBP 67) per month for each entrepreneur. Many people from outside Ukraine would say "So whats the problem? everyone should pay tax".
YES, but its a 320 percent increase.
The people protesting on the streets on Kyiv today claim that this new tax will force them out of business. Really? The real reason I suspect so many are unhappy is that the government is not hitting its so called friends in big business with any significant tax increases. To be fair, the government are claiming they are trying to make things easier for everyone to pay tax and this is understandable.
Maybe the good thing about all these protests is that it clearly shows that a small amount of freedom and democracy is still alive and kicking in Ukraine, unlike a certain country to the north where the governemtn comes down hard on anyone that disagrees with them.
Democracy will never be right for those who see it as something that gets in the way of order and control. So many are claiming that the new government and new President in Ukraine have at least brought 'order and stability' to the country. Democracy may still be a problem for them.