Ukraine finance ministry prepares “compromise” tax reform

Ukraine’s Finance Ministry has prepared a compromise tax reform proposal for today’s meeting of the National Reforms Council, Finace Minister Natalie Jaresko said on Dec. 7, as reported by the delo.ua news site. “Over the last week, we have been developing jointly with MPs a compromise version of tax reform touching on the issues of tax administration and tax policy,” Jaresko said. “Currently, we are working on the details and the potential impact of the changes on the budget and the IMF program. At the same time, Petro Poroshenko Bloc MP Nina Yuzhanina, the leading opponent of the Finance Ministry’s proposal and the author of alternative, more radical, tax reform, claimed there was no real effort from the Finance Ministry to find compromise, delo.ua reported.

On the same day, U.S. Vice President Joe Biden told Ukrainian President Poroshenko that it’s critical for Ukraine to comply with IMF requirements, the Interfax-Ukraine news agency reported.

Alexander Paraschiy: It’s a good sign that the Finance Ministry has started talking about compromise and this approach might reduce tensions. Yet that does not mean that everything will go smoothly and raucous discussions in parliament are still ahead. Analyzing the two proposals, we can foresee that many taxpayers will remain discontented with whatever tax reform is approved, let alone government workers, who could face massive layoffs. So a nasty political battle is about to begin that will require intense negotiations and, possibly, more compromise.