It could be curtains for Ukraine’s so-called “mask shows.”
The phrase refers to the all-too-common and scary times when armed security squads wearing black masks break into a company’s office and scare the staff as part of an intimidating attempt by both law enforcement and tax officials to squeeze witnesses, documents, evidence or … perhaps bribes.
Regular use of such discredited tactics by police and tax officials have played their fair share in making Ukraine’s investment climate notoriously one of the world’s worst. They have been uncomfortably common for both politicians running lucrative state companies such as energy behemoth Naftogaz, domestic tycoons as well as foreign investors.
But on Feb. 9, officials formally banned tax police from wearing black masks during raids. And with the December adoption of legislation “decriminalizing” many economic crimes, questions are again being raised about whether it is necessary at all to have tax police.
An increasingly number of officials and experts are saying that use of paramilitary-style squads, at least in the case of the tax police, is no longer necessary. This rings true, they say, when many of the alleged economic misdoings have been downgraded by the recent legislation from criminal wrongdoing to financial misdeeds. Now that such crimes are punishable by fines, as opposed to jail time, use of brute force is not seen as kosher.
“The need for the existence of tax police in its current form is being examined,” Andriy Portnov, head of judicial reforms within Viktor Yanukovych’s presidential administration, said on Feb. 13 during the ICTV political talk show.
Established in 1996 to support tax collection efforts, the tax police are currently estimated at nearly 10,000 people. Talk of dissolution has lingered for years.
It is possible to hire tax police officers to attack your business competitors for $10,000.
– a businessman from southern Ukraine.
Former President Viktor Yushchenko proposed to replace it with the so-called financial police, a special department that was to be within the Finance Ministry. Draft legislation proposing liquidation of tax police has been mulled by lawmakers in 2010 and 2011. The initiatives did not receive enough votes. It remains to be seen if officials are serious this time around.
Experts say that functions of the tax police could be more effectively and objectively performed by regular police or state security service squads. Overlap is expensive and leads to abuse, experts say.
“When the tax inspectors estimate sanctions [for tax evasion], the tax policemen, working in the same service, have to approve that violation was done even if it is untrue,” Sergiy Shklyar, a senior partner at Arzinger law firm said.
“There is a need to create a single body that would investigate all kinds of criminal cases,” he added.
Apparently desperate to preserve his position and influence, tax police chief Andriy Holovach reported that his squads helped to fill state budget coffersby more than Hr 488 million in 2011, twice more than in 2010. But critics say tax police are ineffective and function mainly as a tool to intimidate.
Only 10 percent of criminal probes opened by tax police reach trials, according to Anatoliy Hrytsenko, a lawmaker, who registered a draft law in parliament proposing liquidation. “This means this body [tax police] works as a way to blackmail, raising accusations against businessmen later demanding bribes,” he said in a recent interview with Delo.
“It is possible to hire tax police officers to attack your business competitors for $10,000,” a businessman from southern Ukraine told the Kyiv Post, asking not to reveal his name for fear of retribution. Arzinger’s Shklyar said abolishing the tax police would be a relief for business and improve the investment climate.
Kyiv Post staff writer Oksana Grytsenko can be reached at [email protected].
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