The payments crisis has become so acute that the mayor of Kalush, in western Ukraine’s Ivano-Frankivsk Oblast, and his staff have gone out on strike in protest. If this continues, other local officials are likely to join him as the winter sets in and citizens start feeling the pain from poor or non-existent municipal services.
The problem also highlights some of the fundamental flaws with Ukraine’s highly centralized system of government taxation and spending. Simply put, taxes shouldn’t all to go Kyiv, and tax money shouldn’t all be distributed from Kyiv.
Ukraine should create a system in which both power and spending are spread out across different levels – national, regional and local.
We have consistently editorialized for local and oblast elections, for the power of regions to levy taxes on incomes and properties, and the power to set their own budgets based on revenue collected. It doesn’t make sense to do everything from Kyiv. Local governments know best their needs, priorities and resources. Of course, the central government will always have to step in with a helping hand for the poorest areas and citizens, as well as to coordinate planning and priorities for the nation.
But there is no reason why mayors and governors should not be elected and have limited taxing, budget and spending powers. Giving local governments the freedom to experiment will also create an incentive for innovation.
Even in the best of times economically, Ukraine’s central government was never able to keep local governments flush with revenue. We are not currently in the best of economic times. So the times demand change and experimentation, with the central government focused on national priorities and income support for the poorest of its citizens.
