While the budget struggles to pay respectable pensions and provide decent health care, it remains unconscionable that lawmakers continue to tolerate an arrangement in which every major corporation working in Ukraine is registered offshore, companies that belong to the wealthiest citizens.

While several justifications are made for this arrangement, their persistence allows people and companies to minimize or evade taxes paid in Ukraine by funneling out great amounts of income.

This, in turn, hits budget revenues and reduces the amount available for spending on public investments and helping the neediest.

Rinat Akhmetov recently declared more than $50 million in income, while most of his Systems Capital Management income piles up in Cyprus, presumably allowing him handsome dividends that helped him – according to London media reports – buy that city’s most expensive penthouse at One Hyde Park for $213 million and amass a fortune now estimated at $15.7 billion. The London Independent newspaper called the posh place: “The luxury tower that’s a haven for tax avoiders.”

Deputy Prime Minister Valeriy Khoroshkovsky did admit that these and other elements of Ukraine’s shadow economy may amount to 40 percent of Ukraine’s annual gross domestic product.

At a recent forum sponsored by the U.S.-Ukraine Business Council in Kyiv, Deputy Prime Minister Valeriy Khoroshkovsky didn’t offer much defense of the practice – nor did he signal he’d lead the charge to combat the tax-minimizing privileges that even his own Cyprus-registered holding company evidently enjoys.

Khoroshkovsky did admit that these and other elements of Ukraine’s shadow economy may amount to 40 percent of Ukraine’s annual gross domestic product, which is about $150 billion.

That’s about $60 billion that goes unreported and mostly likely untaxed. Khoroshkovsky said business has been done this way “for many years.”

He said his business is set up in Cyprus because the possibility of an initial public offering required the owner to be in another jurisdiction. He also said the key to cracking down on tax evasion is through better monitoring of transfer pricing, the complicated intra-company pricing schemes deployed to reduce taxes paid in Ukraine.

That’s fine, but all of these methods flourish because President Viktor Yanukovych – who lives in the grand Mezhyhiria estate owned through offshore companies – and parliament refuse to crack down on havens or force businesses in Ukraine to move their registrations and books onshore.

These kinds of tax breaks and dodges aren’t available to average citizens who, instead, see what’s happening and redouble their determination to hide their comparatively meager incomes from tax collectors since it seems like so many fat cats at the top are doing the same.