Several thousand demonstrators gathered in four cities, including Kyiv, on Nov. 4 to protest against the final draft of the tax code, which will be voted on by parliament later this month.
Protesters in Kyiv outside the parliament building were mostly self-employed private entrepreneurs and small businessmen, who say the tax code will squeeze them out of business.
The protests, which also hit Lviv, Poltava and Ternopil, were the latest in a growing movement of action against the authorities’ efforts to ram the controversial legislation through parliament.
In a new twist, the entrepreneurs were this time backed by some of the trade unions that see how their members could lose jobs if the tax code drives their employers out of business.
Under pressure from the protests that have taken place across the country throughout October, the government made some concessions to the section of the tax code that deals with the small businesses. But the small businesses and private entrepreneurs said these were not enough to improve the overall situation.
The government says the new code will close loopholes and help to boost budget revenues.
But protesters at the Nov. 4 rally had a lengthy list of complaints: the high payments to the pension fund, high payments if they work in different city other than where they live, the absence of social protection for private entrepreneurs, and many others.
One proposal that raised particular anger was ending the current practice whereby goods and services purchased from business that pay the single flat tax are deductible from income tax for large firms. This had helped smaller firms to attract business.
Vitaly Khomutynnyk, a pro-presidential lawmaker who chairs the committee in parliament overseeing tax reform, told the Kyiv Post that this is “one of the toughest questions in the tax code and it will be reviewed separately and last of all.”
For Marina Dybska from Poltava who came to the Kyiv rally, this is a crucial point of the code. Her family runs a transportation business and some of their clients are bigger businesses.
“We will lose many clients,” she complained.
Moreover, the transportation business was taken out of the list of businesses that could pay a single flat tax. The committee in charge of the tax code is, however, discussing bringing it back into the list.
The tax code could do even more harm to this family as it also runs a small shop selling cloths on the market in Poltava. Since the family lives in a village near Poltava, but does their business in Poltava, they would have to pay additional Hr 1,500 every month.
“What can I do? I graduated from university, but there is simply no job in our village, I have to do business in Poltava,” Dybska said.
She said the tax code could be the final straw that forces her business to close after rises in rent, utilities and gas payments.
The possible closure of small businesses has help swing some independent trade unions behind the movement. They see this as a trade-off for when they intend to protest the planned labor code later this month, and want backing from the small businessmen.
Independent trade unions claim that the labor code, like the tax code, favors big businesses and would strip their employees some of their rights.
According to Vyacheslav Roi, the head of one of four federations of independent trade unions, that claims some 267,000 members, the labor code would “legalize the violations that are already are being practiced now.”
Nothing in the labor code indicates that employers would pay their employees a “white” salary, received legally rather than under the table. According Grygory Kobanchenko, deputy head of the National forum of the trade unions of Ukraine, around 4.6 million Ukrainians work unofficially and receive their salaries in the envelopes.
Members of the independent trade unions are not allowed to the meeting where the agreement between the Cabinet of Ministers of Ukraine and the trade unions is discussed on Nov. 4. This agreement stipulates minimal wages and other social standards (Yaroslav Debely)
The four federations of independent trade unions, which have a total of 2.5 million members, claim that the labor code is also a power grab by the larger Federation of Trade Unions of Ukraine, run by pro-presidential Party of Regions lawmaker Vasyl Khara, who co-authored the labor code.
They say the code wants to turn them into “unrepresentative” trade unions as they are smaller, which would deprive them of the right to sign collective agreements and manage the social insurance.
Khara says the independent trade unions misread the labor code.
Kyiv Post staff writer Kateryna Grushenko can be reached at [email protected]
