KIEV, Nov 22 (Reuters) - About 4,000 Ukrainian street traders and other small business owners renewed protests in Kiev on Monday, urging President Viktor Yanukovich to veto a proposed new tax code which they say will destroy their livelihood.
Plans to reform the ex-Soviet republic’s notoriously weak tax system have triggered the biggest public protests against Yanukovich’s government since his election in February and revitalised a fractured political opposition.
The new tax code was passed by parliament on Nov. 18, but has to be signed by Yanukovich for it to become law.
The government is under pressure from major creditors like the International Monetary Fund to reform the inefficient tax system, which ranks third worst in the world after Belarus and Venezuela, according to a World Bank survey.
Prime Minister Mykola Azarov defended the tax code as "the most liberal in Europe" but said that the government was ready to have "constructive dialogue" with representatives of protest groups over details of the reform proposals.
As part of plans to rebalance the budget and satisfy the IMF, the government plans to abandon tax breaks for hundreds of thousands of small entrepreneurs who represent Ukraine’s emerging middle class.
But critics say the proposed new code offers a number of loopholes to the government’s wealthy industrialist backers while hitting millions of low-income earners.
Chanting "Shame! Shame!", thousands massed on Kiev’s Independence Square on Monday, hemmed in by police in riot gear. They urged Yanukovich, who was in Brussels attending a summit with the European Union, to use his powers of veto.
Prime Minister Mykola Azarov defended the tax code as "the most liberal in Europe" but said that the government was ready to have "constructive dialogue" with representatives of protest groups over details of the reform proposals.
The demonstrations coincided with the sixth anniversary of the start of the 2004 street protests against electoral fraud which became known as the Orange Revolution and which denied Yanukovich his first chance in power.
The government is under pressure from major creditors like the International Monetary Fund to reform the inefficient tax system, which ranks third worst in the world after Belarus and Venezuela, according to a World Bank survey.
Orange Revolution leader Viktor Yushchenko became president in early 2005, but Yanukovich made a comeback, winning a presidential election last February after a run-off against Yushchenko’s erstwhile ally Yulia Tymoshenko.
The new tax code will significantly broaden the category of those small businesses which will have to submit details of their operations to the state tax inspectorate, and pay 25 percent of their profits instead of fixed payments.
This will immediately take in large numbers of people like market traders, taxi drivers, cafe owners, street kiosk operators and hairdressers who have until now simply made monthly ad hoc payments to district tax inspectors.
Yanukovich, putting at 300,000 the number of additional people who will now be liable for paying tax under the new system, said on Friday in an interview that the government would be unable to make ends meet unless the tax system was reformed.
The former Soviet republic needs to cut the budget deficit to 3.5 percent of Gross Domestic Product next year from this year’s 5 percent under the terms of its $15 billion IMF deal.
