Distribution of income not received continues
The ancient Greeks before making a decision of state importance thought it obligatory to consult the gods. History knows cases when the gods’ opinion varied, depending on the oracles’ mood (getting in touch with anyone on Olympus required gifts being given to the earthly “operator,” the oracle) and stand. As a rule, divine prognostications were not clearly stated.
The parliamentary budget committee leadership (Petro Poroshenko and his deputies Valery Konovalov and Liudmyla Suprun) made it professionally and unequivocally clear at a November 6 news conference that the committee is prepared to constructively discuss the 2003 budget bill, but that the cabinet version, slated for its second reading in parliament, is no good at all, so far as the lawmakers are concerned. Considering the numerical strength of the Our Ukraine, Regions of Ukraine, and NDP (including the budget oracles, of course) fractions, there is every reason to expect more differences in the second reading than during the first. Deputy Poroshenko said the committee had not yet worked out the final resolution and specific proposals for the bill, so he would not make any prediction at this stage. Instead, he made several remarks boiling down to one thing: Verkhovna Rada would not vote for the budget bill in its current wording.
He further noted that only 20% of the amendments introduced in parliament had been incorporated in the cabinet bill, adding that this made this “even worse than the previous one.” It does not seem worthwhile to analyze the bill or the views of all the parties concerned on how the expenditure items should be stated, because the budget haggling between parliament and cabinet is in progress — in other words, between two political forces — meaning that changes are quickly made in both expenditure and revenue items.
There are, however, interesting aspects worth being mentioned. Thus, for reasons best known on high, the expense item of the Ministry of Fuel and Energy has been increased by a billion hryvnias, although the budget committee never officially requested this; the Regions of Ukraine insisted on it (far from all their proposals in the first reading were taken into account in the final resolution).
At this stage the budget debate is focused on the revenue items. Petro Poroshenko declared that his committee would insist on increasing next year’s budget revenues by over UAH 5 billion (compared to the cabinet’s proposed increment of UAH 1.7 billion). He listed the finance sources: reductions in tax arrears (currently exceeding UAH 14 billion) and transferring some of the state incomes’ revenues to the state budget. The budget committee believes that this will not make the tax burden on business entities any heavier, because what they propose is not increasing tax pressure but upgrading fiscal management and nullifying unjustifiable tax exemptions.
While the picture of tax breaks is more or less clear (Liudmyla Suprun told The Day that it was about the excise duty on alcohol, etc., although it has been reported that the cabinet promptly increased the tax), fiscal management remains to be explained. Deputy Suprun mentioned enhancing the levy on business entities enjoying tax preferences (despite the cancellation of such terms with regard to the joint ventures, for example, there is the practice of court rulings reinstating them) and squeezing back taxes out of large state enterprises. Mr. Poroshenko’s train of thought is on a larger scale; the revenue items are to be increased by administering taxes and leading business out of the infamous shadows.
However, privatization proceeds remain the largest stumbling block. Apparently, they will be considered as part of budget revenues, rather than the “financing” ones. All that remains is defining the amount and where this money will be channeled. Petro Poroshenko says the cabinet has not as yet decided on nine regional power distribution companies (oblenerho) and Ukrtelekom. Deputy Suprun adds that this has given rise to a controversy. The original 2003 budget bill set the privatization proceeds at UAH 2.1 billion, while the explanatory note read that the sum could be increased by UAH 2.4 billion. The oblenerhos and Ukrtelekom are the principle components of the privatization proceeds, but practice shows that it is best not to sell oblenerhos with debts. As for Ukrtelekom, its privatization remains quite ambiguous. The impression is that the privatization proceeds and ways to allocate them are to be discussed “just in case,” if and when this property is sold.
