Back
Automatically translated version. May contain inaccuracies compared to the original.
Why they want to dismiss Finance Minister Marchenko: abuses, unprofessionalism, sabotage
A draft resolution No. 5449 on the resignation of Finance Minister Serhiy Marchenko was registered in the Verkhovna Rada on 29 April 2021.
This is reminded today by the website dubinsky.ua.
The text of the document was published with a delay.
But many MPs signed it: Serhiy Bunin, Marharyta Shol, Oleksandr Yurchenko, Maksym Pavliuk, Bohdan Torokhtiy, Artem Nahaevskyi, Maksym Huzenko, Oleh Marusiak, Pavlo Pavlysh, Dmytro Solomchuk, Andriy Bohdanets, Ihor Vasyliev, Anton Polyakov, Olena Lys, Oksana Hrynchuk, Maksym Zaremskyi, Artem Chornomorov.
There are plenty of complaints about the minister’s work, which MP Oleksandr Dubinsky stated back in June 2020:
— I sent an official parliamentary inquiry to Prime Minister Denys Shmyhal regarding the dismissal of Serhiy Marchenko.
— I filed statements with the National Police, the State Bureau of Investigations, NABU, and the Prosecutor General’s Office requesting checks of facts of abuses involving illegal VAT refunds in June 2020.
Serhiy Marchenko should have been dismissed long ago, but nothing has changed.
In the explanatory note to draft resolution No. 5449 the deputies listed many arguments regarding the negative activities of Marchenko’s subordinates — the Tax and Customs Services of Ukraine:
as a result of large-scale schemes to unlawfully form VAT, the so‑called “twists,” the budget of Ukraine in June 2020 did not receive at least 2,7 billion hryvnias, as Dubinsky previously reported. At the same time, according to the signatories of the letter, the amount of bribes to corrupt officials of the State Tax Service of Ukraine amounted to 135 million hryvnias. Over 5 months of 2020, 245 million hryvnias were declared, whereas for the results of 2018 the amount was 840 million hryvnias, and in 2019 it was 715 million hryvnias. This indicates a significantly negative trend in the reduction of tax liabilities.
The explanatory note also stated that evasion of excise tax on retail sales occurs in conjunction with VAT evasion. In particular, by selling tobacco products through retail outlets without issuing fiscal receipts or by issuing forged receipts, documents are sold to controlled or third‑party companies that in fact do not engage in trading that product. They only substitute the nomenclature and create an illegal tax credit for enterprises in the real sector of the economy.
Regarding control over excise tax receipts, in February–April 2020 the weighted average percent fulfillment of indicative targets for alcohol was 41,6%, and in June–August — 70,4%, meaning the plan was underfulfilled. As for tobacco and tobacco products, receipts relative to last year were in May 123, 4%, in June — 116,8%, in July — 108,3% and in August — 98,4%.
Dynamics should be much better, given that the excise tax rate on tobacco products was increased by 20% (since the beginning of 2020). Yet receipts decreased.
The Regulation on the State Tax Service clearly defines that the State Tax Service is a central executive authority whose activity is directed and coordinated by the Cabinet through the Minister of Finance and implements the state tax policy.
Schemes to reduce VAT liabilities that lead to particularly large budget losses cannot exist without the approval of the Finance Ministry, and its inaction points to incompetence, unprofessionalism of a high‑level official and a complete mismatch with the held position.
Abuses in the Tax Service and the State Customs Service have not received proper response from Finance Minister Serhiy Marchenko.
There are every reason to speak of Marchenko’s improper performance of his official duties. And also that such an approach causes substantial harm to state interests and damage to the state budget.
The draft resolution also notes that the national electronic transit system provided for by Law No. 78-IX has not been implemented, and there are also questions about the operation of authorized economic operators at the customs (Law No. 141-IX).
Similar inaction is observed in drafting bills and other regulatory acts (subpar. 2 para. 4 of the Regulation) to reform tax legislation. In particular, in preparing bills to reduce the tax burden on the payroll by merging the single social contribution, the military levy and personal income tax into one tax, reforming local taxes and other tax law issues.
An analysis of personnel appointments in customs authorities and their subdivisions shows that people who headed key units during the most corrupt periods are being appointed to leadership positions in the State Customs Service. Important positions are given to people under whom schemes flourished.
Renewal of the personnel composition in the SCS is effectively not happening and corruption risks are growing. Therefore, the Customs Service’s contributions to the state budget are insufficient and indicate ongoing abuses.
Confirmation of the Ministry of Finance’s ineffective financial policy is also the use of funds from the special COVID‑19 Fund: only 30% of that fund’s resources have been spent so far, while it is known that Ukrainians now can hardly get free coronavirus testing, and hospitals are not supplied with disinfection and protective equipment. Patients cannot receive guaranteed medications in the necessary volumes. Instead, funds from the special fund are being reallocated to other needs. The critical sector is chronically underfunded.
Another example of Serhiy Marchenko’s actions: Ukraine repurchased part of the GDP warrants in advance, even though the payment date was only due in 2021. The finance minister explains this as an actual saving, but considering the current state of the economy it is doubtful we can afford such steps, since the warrants were effectively exchanged for bonds at 7,25% that will be repaid in subsequent years.
Moreover, the Finance Ministry completely failed one of the key reforms — reducing the tax burden on wages. It also nullified cooperation with the relevant Verkhovna Rada Committee on reforms across different sectors.
In addition, Serhiy Marchenko was accused in the accident on 15 September 2020 on a high‑pressure main gas pipeline with diameter 1020 mm (Kyiv–Western Ukraine).
Because of the minister’s unprofessionalism, cooperation with the IMF was disrupted: 12.06.2020 Ukraine received the first IMF tranche under the new 18‑month stand‑by program. The previous schedule provided that by 15.05.2021 Ukraine should have received the fourth, penultimate tranche of the program. The total amount of funds not received for this period was 1,4 billion SDR, equivalent to $2 billion.
On Marchenko’s record is also the rigid fiscal policy during a recession. During 2020 and January–April of 2021 the Finance Ministry maintained a primary budget surplus, that is, it serviced public debt payments with taxpayers’ money and withdrew liquidity from the economy instead of actively attracting funds to finance anti‑crisis measures.
The explanatory note provides analyses and calculations indicating miscalculations, errors and inaction by the finance minister. Many facts negatively affected the implementation of state financial, tax and customs policy. All this resulted in the state budget’s failure to receive funds.
The purpose of the resolution is to dismiss Serhiy Marchenko from the post of Minister of Finance. For the proper and quality formation and implementation of state financial, tax and customs policy, which affects the interests of the state as a whole, as well as the rights and interests of citizens of Ukraine in particular. For now the document has been removed from consideration, but it may be returned at any moment.
Document: PDF proof of the original version of the news item "За что хотят выгнать главу Минфина Марченко: злоупотребления, непрофессионализм, вредительство". It records the publication content at the moment of the first scan, the preservation date and the source: ANTIKOR.
