Tax code protests intensify

People on the street say the rich are not paying their fair share of taxes. A new sign hung from a protest camp tent on Nov. 25 delivered this blunt message: “Veto or Revolution.”

Tens, maybe hundreds, of thousands attended tax code protest rallies across Ukraine as pressure mounted on President Viktor Yanukovych to choose.

The demonstrators on Nov. 25 made three demands: Veto the tax code, dismiss Prime Minister Mykola Azarov and his government, and hold parliamentary elections in 2011, as called for by the 1996 constitution now in force.

As this edition of the Kyiv Post went to press, about 10,000 protesters were rallying on Kyiv’s Independence Square. Mass protests also took place in Donetsk, Cherkassy, Lviv, Ternopil and Sumy.

The non-partisan tax code protest campaign is setting a precedent, according to political analysts.




People rally against controversial tax legislation on Independence Square in Kyiv on Nov. 22 (top photo). At bottom, people demonstrate in front of President Viktor Yanukovych’s office during a rally at which thousands of small business owners participated. (Peter Byrne, UNIAN)

It’s the first nationwide campaign since independence when citizens have risen to fight for their economic interests. Four million people are trying to protect their livelihoods, not just their right to vote.”

- Serhiy Taran, director of the Kyiv-based International Democracy Institute.

Representing small- and medium-sized business, the crowds flocked to downtown Kyiv for the second time this week on Nov. 25 to protest tax reform legislation drafted by President Viktor Yanukovych’s government and adopted last week by his ruling majority in parliament.

Marking one of the largest protests since the 2004 Orange Revolution, citizens gathered on Kyiv’s Independence Square and marched several blocks to the Presidential Administration, where they urged Yanukovych to veto the tax code bill. They see the tax code, developed by Yanukovych’s oligarch-backed leadership, as unfairly increasing the tax burden on small businesses while offering big tax cuts for big ones.

Protesters from across the country, including Yanukovych’s hotbed of support in eastern Ukraine, see the current tax code as a broken promise. Before being elected president in February, Yanukovych campaigned on granting a five-year tax holiday to small business.

To demonstrate their resolve, hundreds of apolitical protesters led by a group of little-known organizers have spent the night on Kyiv’s central square despite cold temperatures and heavy rain. They slept on 5-inch thick Styrofoam slabs in five large army tents.


A woman shouts slogans and beats a bucket during a mass rally on Independence Square in Kyiv on Nov. 25. In recent months, small- and medium-sized business owners have repeatedly criticized the government’s plan to change the tax code, passed by parliament on Nov. 18. The government has defended the tax changes, but some business leaders have said it will increase the burden on small businesses and benefit mainly big companies, many with close links to the ruling party. (AFP)

Organizers of the nationwide protest, which has been supported by similar rallies in many Ukrainian cities, are also calling upon Yanukovych to put off “undemocratic” plans to move parliamentary elections back from 2011 to 2012. They have started collecting signatures to call for a nationwide referendum in which citizens could vote for a snap parliamentary and presidential election. Another demand of the protestors is for Yanukovych to sack the government of Prime Minister Mykola Azarov.

How has the government responded?

Traffic inspectors stopped hundreds of buses bringing thousands of protesters to Kyiv from across the country, according to residents in Cherkassy, Lviv, Kharkiv, Odessa and several other regions.

Svyatoslav Shvetsov, a protest organizer, said on Nov. 25 that dozens of busloads of demonstrators were turned back in Khmelnitsky on the way to Kyiv. Similar stories were reported in Lviv, Kherson, Kharkiv and Zhytomyr.

Ruslan Zorya, an entrepreneur and leader of the non-government Aktiv-Cherkassy group, on Nov. 24 told reporters that only 10 of the 30 buses taking people to the tax code demonstration were allowed to make the trip. The other buses were turned back for various technical violations, he said.

Cherkassy police responded that many of the bus drivers had not filed for permission to make the journey, as required by regulations.

On Nov. 24, officials from Kyiv headquarters of the traffic police announced that the bus drivers are prohibited to transport protesters during the night, citing concern for the protesters’ safety and new regulations. Overall, police said they had stopped more than 500 buses bringing protesters to Kyiv from regional centers across Ukraine before the first Nov. 22 demonstration.

Television coverage of the protests has been “erratic,” according to the Kyiv-based Telekritika media watchdog, which on Nov. 24 said reports from the most-watched channels contained “a little bit of censorship, hysteria and no analysis of what long-term consequences of the protest might be.”

Accused in recent months of muzzling media and backsliding on democracy, the president issued a restrained response to the protests, saying he would wait until the experts analyze the final version of the code to make up his mind.

“When I look at the business representatives ... they are demanding to leave loopholes in the law to avoid paying taxes,” he said on Nov. 17. “It’s impossible not to pay taxes and for the country to live well.”

Protest organizers agree.

Entrepreneurs are ready to pay in honest single flat tax…. What we want is that tax code doesn’t make the tax police omnipotent and we can play by simple and transparent rules.”

- Volodymyr Dorosh, civic activist, one of the leaders of the anti-tax protest.

Prime Minister Azarov was initially dismissive of the protesters demands, but by Nov. 24 other government officials were sounding more conciliatory.

“Unfortunately, small businesses account for only several percent of the revenue system of the national and local budgets. The rest comes from big businesses,” Azarov told reporters in Kyiv on Nov. 18, the day before he left for a 4-day trip to Libya and Egypt.

On Nov. 23, First Deputy Prime Minister Andriy Klyuyev said changes to the tax code could be introduced after Yanukovych signs the bill into law.

“We agreed that we would look into all suggestions, and we also said we will support good suggestions,” Klyuyev was quoted by reporters as saying.

No agreements were reached, according to protest organizers, who on Nov. 24 downplayed differences between the two dozen or so organizations backing the grassroots protest campaign. Spokespersons for the group, Oleksandr Danylyuk and Oksana Prodan, said Klyuyev had consulted with some protest leaders but not negotiated any deal.

“There is no divide. Klyuyev is simply voicing what he desires instead of stating the facts. Klyuyev invited people to talk about the demands of protesters, but he invited them for consultations about what irritates entrepreneurs and small business owners the most about the new tax code. Let me stress this was not a negotiating group, but a group invited by the government to discuss the tax code,” Oleksandr Danylyuk, a spokesman for the demonstrators told reporters. He added that the consultations have been held daily since tax code protesters gathered on Independence Square on Nov. 22.

Ukraine’s tax system is ranked the third worst in the world after Belarus and Venezuela, according to the World Bank’s “Doing Business” annual survey of 183 countries. As is the case in neighboring Russia, businesses often choose to pay bribes instead of taxes, a practice that saves time and money but brings nothing into national coffers. The president and government say it is vital to entice entrepreneurs out of this “shadow economy” if it is going to boost revenues.


Kyiv Post staff writers Kateryna Grushenko can be reached at grushenko@kyivpost.com and Peter Byrne can be reached at byrne@kyivpost.com