Reforms en Route: how changes in legislation affect the lives of ordinary people

Kherson, Mykolaiv, Odesa, 1-3 July 2015 – The Reanimation Package of Reforms initiative (RPR) continues its "Reforms en Route" all-Ukrainian tour, presenting their findings on the adoption and implementation of urgent reforms for the country. This time RPR experts visited Kherson, Mykolaiv, and Odesa, as supported by UNDP and other partners.

Taking into account the specifics of the southern region, the RPR team discussed changes in the tax system of Ukraine as well as the latest achievements and challenges of trade and economic reforms in the framework of European integration, including food safety. Experts focused on the access to the EU funds for implementation of their projects by the residents of the southern regions. They also spoke of the specificities of local elections scheduled for the Fall this year according to the new electoral legislation and new opportunities in the field of public financing of parties and transparent reporting on their use.

The tax reform initiated by the government presents some positive aspects. To name a few: simplification of the income tax calculation, reduction of tax burden on the salary under certain conditions, implementation of electronic VAT administration system (without allowance). However, some negative aspects are also in place: VAT allowance, introduction of new rates and fees, in particular additional import fee, additional excise tax, military fee, etc. Nonetheless, the majority of these measures are provisional.

"The Reanimation Package of Reforms suggests the changes that are called to alleviate the negative effect: the State Fiscal Service reform and its transformation into Customer Service, introduction of electronic services for taxpayers, taxation of distributed profit, integration of single social contributions (37% and 3.6%) and income tax (15%, 20%) at a single rate of 29%, a two-level VAT (10% and 20%). All these proposals might increase the internal investment resource by UAH 100 billion, which will jumpstart Ukrainian economy similarly to other countries," emphasized Illia Neskhodovsky, RPR tax reform expert.

"Ukrainian parties spend about UAH 1 billion for every national election altogether. Only oligarchs are capable of bringing large amounts in politics in return for loyal laws. RPR in cooperation with international institutions promotes the introduction of public funding of political parties represented in the Parliament. It will ensure a party's financial independence from oligarchs and transparency of its revenue and expenditure sources," noted Vadym Misky, RPR expert groups' coordinator.

A year has passed since the signing of the EU-Ukraine Association Agreement, however, Ukraine still can't fully benefit an enhanced cooperation with the European Union. Reforms are moving extremely slowly, particularly in key areas for economy and trade: customs, antimonopoly reform, harmonization of sanitary and phytosanitary measures, etc.

"Instead of going on vacation, the Parliament together with the Government has to work intensively on development and adoption of European integration laws, lead the awareness campaign, and create conditions for Ukrainian goods to get to European markets. At the same time, the Agreement has already opened up wide opportunities, particularly for development of the southern regions of Ukraine: access to some EU funds, grant programmes and loans at a low interest rate, duty-free export opportunities and revision the quotas size, including for funds for innovative projects. Beyond any doubt, full European integration will still require active actions, additional investments into modernization, the need to change and accept European "rules of the game" by the government, society, and business alike. In return, it will open for Ukraine even better and wider perspectives to become an equal member of the European community," underlined Maria Golub, "Stronger together!" information campaign representative, RPR European integration expert.