Ihor Liskі’s column specially for Economichna Pravda
Discussions about the proposed OP tax reform “10-10-10” do not stop.
The main theses are “it’s not the right time, because there is a war in Ukraine”, and “it can reduce income to the state budget, and therefore, the financing of the Armed Forces.”
I think it’s time for me to join the discussion.
As an entrepreneur with 20 years of experience, who has created more than one thousand jobs in his lifetime, I have always looked at taxes from a different angle.
First of all, taxes are a social contract between the state and citizens. The essence of this contract is fair relations.
On the one hand, these relations stimulate the development of people and enterprises, the creation of goods, goods and services, and therefore jobs with decent pay.
On the other hand, the state must ensure the rights and freedoms of its citizens, security and justice for these taxes in the most effective way.
I would very much like society to understand where the state’s money comes from, because taxes for employees are paid by the employer.
Workers often do not realize that they are the main beneficiaries of the country. That is, they are the state! Everything in the country is maintained on their money.
I always urge everyone to get rid of sovkov phobias, in which the state has always separated itself from people, becoming an institution of coercion, and citizens tried in every possible way to remove themselves from the state, hiding their true interests and income.
Another myth concerns entrepreneurs (not to be confused with oligarchs, who have another source of wealth). Ukrainians often believe that entrepreneurs are not interested in paying taxes, and therefore, in building the state and the Armed Forces. But entrepreneurs are the driving force of Ukraine’s development, and this terrible war confirmed it.
From the first hours of the war, it was businessmen, as the most active, patriotic and caring citizens, who took up arms in defense of the country or became volunteers or sponsors, supporting the Defense Forces.
It is the Ukrainian business that continues to work and pay taxes under shelling and during constant power outages.
Convinced: tax reform is relevant right now.
This will give a powerful signal to the business that continues to work in Ukraine. Especially for those who hesitate to start creating jobs in Poland, Bulgaria or Ireland, where there is security, favorable credit and lower taxes.
This may inspire those who have already left to return and work here, in particular foreign investors when considering projects in Ukraine after the Victory.
I consider the exit from the shadows or from the gray zone of a significant part of the Ukrainian economy to be an equally important argument for the reform. This will significantly compensate for budget losses and improve competition and tax administration.
It is no secret that many enterprises are forced to keep double records: for the tax office and for the owners. Thousands of tax officials try to untangle it, and often this process becomes a source of corruption or abuse.
Entrepreneurs often face manipulations regarding tax declarations or audits that turn into “mask-shows”. The reform would make evading taxes or paying salaries in “envelopes” unprofitable for business.
Cash tax and VAT refund guarantee: 10-10-10 reform is back on the agenda. What’s new there?
Regarding fears that the rich will pay less and become even richer. This is good, because this money will return to the economy as an investment. Where the nature of income is not innovative-entrepreneurial, but rent-seeking, a different approach is needed.
Conventionally: most of our oligarchs made their fortunes either from minerals that they privatized or obtained licenses, having access to power, or from exclusive access to the state budget.
It is much easier to limit their profits by increasing rent payments and luxury taxes (due to expenses – taxes on real estate, expensive cars, yachts).
I would also increase environmental fees from harmful industries. This would not only fill the budget, but also stimulate enterprises to invest in environmental modernization. I also support increased taxation of harmful cigarettes and alcohol, excise duty on fuel and emissions.
An even more innovative approach is not only to reduce the income tax, but to replace it with a tax on withdrawn capital. This will remove problems with its administration, because most of the claims of the tax authorities refer to this. Almost every transaction is questionable, and this is a reason for manipulation and corruption.
Moreover, entrepreneurs will be motivated to reinvest working capital in development until they want to withdraw funds, and only then will the tax appear. It can be even bigger, the main thing is that it should be clear to everyone.
I am sure: if the reform is carried out carefully and decisively, the revenues will not decrease, but will even increase. To insure the budget, it is possible to increase the military levy and cancel all tax benefits as much as possible.
Overcoming the conservatism of the IMF and EU institutions will now be much easier. The argument is to save the economy during the war. Ukrainians have already proven their resilience in the confrontation with the enemy, so we will be persistent in reconstruction as well. The main thing is to create normal conditions so that tax officials do not interfere with honest business.
Our task after the Victory is not only to return Ukraine to its pre-war state, but to build an even better and more modern state. Ukraine above all!
Discussions about the proposed OP tax reform “10-10-10” do not stop.
The main theses are “it’s not the right time, because there is a war in Ukraine”, and “it can reduce income to the state budget, and therefore, the financing of the Armed Forces.”
I think it’s time for me to join the discussion.
As an entrepreneur with 20 years of experience, who has created more than one thousand jobs in his lifetime, I have always looked at taxes from a different angle.
First of all, taxes are a social contract between the state and citizens. The essence of this contract is fair relations.
On the one hand, these relations stimulate the development of people and enterprises, the creation of goods, goods and services, and therefore jobs with decent pay.
On the other hand, the state must ensure the rights and freedoms of its citizens, security and justice for these taxes in the most effective way.
I would very much like society to understand where the state’s money comes from, because taxes for employees are paid by the employer.
Workers often do not realize that they are the main beneficiaries of the country. That is, they are the state! Everything in the country is maintained on their money.
I always urge everyone to get rid of sovkov phobias, in which the state has always separated itself from people, becoming an institution of coercion, and citizens tried in every possible way to remove themselves from the state, hiding their true interests and income.
Another myth concerns entrepreneurs (not to be confused with oligarchs, who have another source of wealth). Ukrainians often believe that entrepreneurs are not interested in paying taxes, and therefore, in building the state and the Armed Forces. But entrepreneurs are the driving force of Ukraine’s development, and this terrible war confirmed it.
From the first hours of the war, it was businessmen, as the most active, patriotic and caring citizens, who took up arms in defense of the country or became volunteers or sponsors, supporting the Defense Forces.
It is the Ukrainian business that continues to work and pay taxes under shelling and during constant power outages.
Convinced: tax reform is relevant right now.
This will give a powerful signal to the business that continues to work in Ukraine. Especially for those who hesitate to start creating jobs in Poland, Bulgaria or Ireland, where there is security, favorable credit and lower taxes.
This may inspire those who have already left to return and work here, in particular foreign investors when considering projects in Ukraine after the Victory.
I consider the exit from the shadows or from the gray zone of a significant part of the Ukrainian economy to be an equally important argument for the reform. This will significantly compensate for budget losses and improve competition and tax administration.
It is no secret that many enterprises are forced to keep double records: for the tax office and for the owners. Thousands of tax officials try to untangle it, and often this process becomes a source of corruption or abuse.
Entrepreneurs often face manipulations regarding tax declarations or audits that turn into “mask-shows”. The reform would make evading taxes or paying salaries in “envelopes” unprofitable for business.
Cash tax and VAT refund guarantee: 10-10-10 reform is back on the agenda. What’s new there?
Regarding fears that the rich will pay less and become even richer. This is good, because this money will return to the economy as an investment. Where the nature of income is not innovative-entrepreneurial, but rent-seeking, a different approach is needed.
Conventionally: most of our oligarchs made their fortunes either from minerals that they privatized or obtained licenses, having access to power, or from exclusive access to the state budget.
It is much easier to limit their profits by increasing rent payments and luxury taxes (due to expenses – taxes on real estate, expensive cars, yachts).
I would also increase environmental fees from harmful industries. This would not only fill the budget, but also stimulate enterprises to invest in environmental modernization. I also support increased taxation of harmful cigarettes and alcohol, excise duty on fuel and emissions.
An even more innovative approach is not only to reduce the income tax, but to replace it with a tax on withdrawn capital. This will remove problems with its administration, because most of the claims of the tax authorities refer to this. Almost every transaction is questionable, and this is a reason for manipulation and corruption.
Moreover, entrepreneurs will be motivated to reinvest working capital in development until they want to withdraw funds, and only then will the tax appear. It can be even bigger, the main thing is that it should be clear to everyone.
I am sure: if the reform is carried out carefully and decisively, the revenues will not decrease, but will even increase. To insure the budget, it is possible to increase the military levy and cancel all tax benefits as much as possible.
Overcoming the conservatism of the IMF and EU institutions will now be much easier. The argument is to save the economy during the war. Ukrainians have already proven their resilience in the confrontation with the enemy, so we will be persistent in reconstruction as well. The main thing is to create normal conditions so that tax officials do not interfere with honest business.
Our task after the Victory is not only to return Ukraine to its pre-war state, but to build an even better and more modern state. Ukraine above all!