Economist: “Tax on parcels”, increase in gas excise taxes and harassment of small businesses have clear signs of lobbying

The introduction of a large package of tax changes proposed by the government clearly violates the principles of economic justice, writes a well-known economic analyst Volodymyr Dubrovsky, senior economist at CASE-Ukraine, a specialist at the Economic Expert Platform, in his blog, UNN reports.

"It is important that all "mobilization" actions of the authorities are "fair" and, at the same time, effective - they minimize the stress on society and maximize the result. As the largest business associations rightly point out in their statements, de-shadowing would best meet both criteria. But it requires very profound changes in regulatory and law enforcement agencies. It's no secret that all major tax evasion schemes involve open and blatant violation of the law, and therefore require "cover-ups," Dubrovsky writes.

The expert points out that tax innovations proposed by the government can often be traced to the interests of lobbyists. For example, the increase in the excise tax on gas. As the expert reminds us, the excise tax on fuel is essentially a tax on harmful emissions, and cars with LPG produce half as much.

"It is actually fair that gas should be about half the price of gasoline. However, the winners are gasoline producers (Kolomoisky has long lobbied for this rule) and the informal cartel of large branded gas stations that has been repeatedly fined for price fixing, which is not profitable for them to operate in a highly competitive gas market. And the losers are millions of not the richest car owners and carriers, whom the state is now preparing to "abandon" in favor of the cartel. That's all the justice," Dubrovsky points out.

He recalls how small businesses have been put on the back foot for years: "The lobbyists of big retail, who are prevented from creating a full-fledged cartel by it, have already imposed unnecessary cash registers on it under the slogan 'everyone should pay the same', and now, inspired by this success, they are trying to force it onto the general taxation system, which provides for expensive and even more unnecessary accounting, with inspections (and corresponding "agreements") in addition," the expert writes, and points out that the budget has not received the fiscal effect of UAH 100 billion promised by lobbyists.

The CASE-Ukraine senior economist sees the new government initiative on the "parcel tax" as a continuation of cartel pressure against small businesses and Ukrainians looking for ways to save money by buying cheaper goods from foreign online stores and marketplaces with postal delivery. According to Volodymyr Dubrovsky, imposing VAT on such parcels will not benefit the budget.

"Controlling parcels and paying the tax is costly. It's one thing when we are talking about only about 270 thousand parcels in the first six months of 2024, whose value exceeds 150 euros, and quite another when we have to pay and accept payments for all 39.6 million in the same six months. The big question is whether the sheepskin is worth the price, especially given that the costs of administration (not only for the state, but for all parties) are a net social loss," he points out and draws attention to the fact that the Ministry of Finance has not even provided estimates of how much the ‘parcel tax’ will bring to the budget.

However, it is clear that the additional tax burden is in favor of big business traders and importers, whose prices in Ukraine are twice as high as in foreign markets.

"Ordinary people will not perceive belt-tightening measures as 'fair' when the state is protecting the above-market profits of big business - and even more so in wartime," Dubrovsky wrote.