Tobacco Industry Lobbyists Secured Tax Breaks for Themselves in the Rada's Financial Committee. The Public Will Cover Them with Higher Utility Bills and FOP Taxes

Tobacco industry lobbyists secured tax breaks for themselves in the Rada's Financial Committee. The public will cover them with higher utility bills and FOP taxes.

Tobacco monopolists managed to lobby the relevant committee of the Verkhovna Rada for tax relief on excise duties for TVENs, that is, for sticks for electronic cigarettes. Everything was pushed through very quickly and forced into place.

Namely: during today's meeting of the Committee on Finance, Tax and Customs Policy, on 25 February, by a majority vote a decision was made to support amendments No.55 and No.64 to draft law No.4278.

The draft law is not a specialized excise regulation; it concerns postal activity and bears the corresponding title — “Draft Law on Amendments to the Tax Code of Ukraine (regarding taxation of goods that are moved (sent) in international postal and express shipments).” It’s clear that the tobacco industry pushed for the concessions in haste and on the fly.

The two aforementioned amendments (No.55 and No.64) imply substantial tax benefits. The amendments provided for a reduction of excises on TVENs starting from 1 July 2021, but the head of the Servant of the People faction in the Verkhovna Rada, David Arakhamia, on a voice vote introduced a change and moved the date to 1 April 2021.

This means state and local budgets will receive significantly less revenue during that period. We are talking about at least 1,8 billion UAH in lost revenue. It could be even more.

After all, everyone knows that tobacco producers, before any excise increase, operate three shifts and build up huge stocks of products taxed at the old rates. Those stocks can sell for a long time, while new production (with payment of higher excises) proceeds more slowly. This results in reduced budget receipts and, consequently, increased burden on other taxpayer groups.

“We have already reduced VAT for the agricultural sector to 14%: that is, everyone pays 20%, while they only pay 14%. And now we’re helping tobacco monopolists for unclear reasons. All this will lead to a budget hole of at least 1,8 billion UAH, which will later have to be closed at the expense of others. The same FOPs or by raising utility tariffs for the population, which we think of last, while first and foremost we think of huge conglomerates,” said Member of Parliament Oleksandr Dubinskyi at the financial committee meeting; he voted against the tobacco amendments.

So that FOPs and ordinary people know who exactly is lobbying the tobacco industry’s interests in the Verkhovna Rada, Dubinsky.ua publishes the full list of MPs—members of the Committee on Finance, Tax and Customs Policy—who supported reducing the tax burden for producers of sticks. There are 19 of them in total:

Daria Volodina;

Oleh Voronko;

Oleksandr Hereha;

Danylo Hetmantsev;

Robert Horvat;

Yulia Didenko;

Maryan Zablotskyi;

Andrii Ivanchuk;

Viktoriia Kinzburska;

Anna Kolesnyk;

Oleh Kulinich;

Oleksii Leonov;

Anastasiia Liashenko;

Oleh Marusiak;

Yevhenii Petruniak;

Ella Repina;

Oleksandr Sova;

Oleksii Ustenko;

Andrii Kholodov.

The budget-draining amendments will be incorporated into draft law No.4278, which was adopted at first reading on 27 January 2021 and will now be brought to the plenary hall for second reading.

“Of course, I will put forward amendments for confirmation and persuade colleagues to vote against them. Enough of stealing from the budget and settling your own petty interests at the expense of ordinary people, who will close this shortfall with their taxes,” said Oleksandr Dubinskyi.

Already in January 2021 the Ministry of Finance reported a state budget deficit of 4,9 billion UAH, and for the general fund — 10,3 billion UAH. It is clear that it will continue to grow throughout the year, especially if deputies approve tax breaks for certain business groups.

Recall that the 2021 budget was adopted with a record deficit — 246,6 billion UAH. The revenue side was approved at 1,084 trillion UAH, and expenditures at 1,32 trillion UAH.

Andrii Pshenichnyi for the site dubinsky.ua