Ukraine must stop its demographic decline
YES
Jakub Parusinski writes that childless people should be made to pay higher taxes to halt demographic slide.
By 2050, the median age in much of Europe will be older than 50. Despite immigration, working populations in many European countries will drop by 10 to 20 percent over the next 25 years, while the number of pensioners booms. Proportionally speaking, this would be the biggest worker collapse in Europe since the Black Plague.
Consequences will likely be devastating. Debt will soar and economies become uncompetitive in technology, services or manufacturing. Inflation and unemployment will follow, driving even more young people away. Fearful pensioners will vote in increasingly authoritarian types to protect their pittances.
With rich-world problems and poor-world incomes, Ukraine will be particularly hard hit. Pension contributors, broadly speaking workers, are expected to fall by a quarter by 2050. The ratio of retirees per worker is set to double.
Maintaining a reasonable demographic balance is essential for the survival of any system. In the past, this has been ensured by a number of economic and social factors. Children were seen as workers, successors, and a retirement plan.
Things changed somewhat after the demographic transition and creation of social institutions in industrialized nations. Yet rising salaries, moreover increasing with seniority, continued to compensate for the growing costs of raising kids. Under socialism the state provided the basic necessities.
Tough as it may have seemed, that golden period is over.
Economic stagnation, rising living costs and widening inequality now threaten the sustainability of the system more than ever. Providing high quality child care, a precondition for many tentative young parents, is getting more and more expensive.
Meanwhile, a growing number of couples, particularly in the relatively high-paid liberal professions, are opting out of parenthood. Yet the pyramidal structure of their respective industries, which often rely on working low-paid interns and entrants to the bone, is crumbling at the foundations.
In some West European countries the baby boom generation has clogged up senior positions. While this is not yet a problem in Ukraine, the country is headed in the same direction.
The introduction of a tax on childlessness may seem an infringement on liberty, but the same can be argued, rightly or not, of most taxes. Moreover, it can also be thought of in a different manner.
Progressive tax systems, in which the richer pay a greater share of their income, generally pass the fairness test. Child-linked expenses, a time-honored reason why societies tend to give greater benefits to family heads (think elderly men), affect income inequality.
People who choose to forsake them are relatively richer. Under a “progressive tax system plus,” which takes into account the cost of raising children, they should thus pay a greater share.
The childlessness tax can also be seen as a “sin tax,” discouraging a behavior that imposes social costs. Such taxes have helped reduce tobacco smoking in Western countries. Even if it doesn’t make certain individuals choose to have children, and it won’t, it will help share the burden of those who do.
Naturally, a childlessness tax should be accompanied by other measures.
These start from pro-family policy, like education reform or allowing gay and lesbian couples to adopt, and end on tax issues, like reducing absurdly high employer social contributions, which should boost employment and reduce job insecurity. Even then, pensions will likely need to be reduced and the retirement age increased.
A tax on childlessness is not a perfect solution. Identifying eligible candidates would be a major, perhaps insurmountable headache, as would implementation. Other solutions, such as a pure progressive tax system with sizable exemptions for parents, could be more efficient. But given the demographic challenges Ukraine is facing, I believe it warrants a serious debate.
Kyiv Post staff writer Jakub Parusinski can be reached at [email protected]
Childless already pay for those with kids
NO
Svitlana Tuchynska writes that having children is a choice for individuals not the government.
Ukrainian politicians think they have come up with another idea on how to squeeze money from people. This time they want those of us who are older than 30 and childless to pay 17 per cent income tax.
Not only this idea violates basic human rights it also shows how little understanding those in power have about life of most of people in this country.
Back in the USSR people did pay a higher tax for being single, childless and for having only one child. This is how Stalin’s totalitarian regime stimulated birth rates after 1941. It is quite bizarre to see this idea occupying minds of those in power in Ukraine in 2012.
First of all, there is not a single law in this country that regulates the private life of citizens. Nor is there legislation that requires citizens to marry and have children.
To more heavily tax those who do not create new life seems like a brutal violation of a human right for private life.
Economically speaking, the childless already do pay for people with children.
Their taxes finance schools and playgrounds. It is also out of their taxes that social payments for mothers of newborn are paid – Hr 25,000 for the first child and more for every other child.
Apart from that, Ukraine does not seem like the country where making up new taxes or increasing existing ones would do any good. Between 30 to 60 percent of nation’s economy is in the shadows.
The country is riddled with corruption at all levels. Bureaucracy and paperwork are wild and flourish. Most importantly, the rich avoid taxation by hiding their billions in Cyprus and other offshore tax havens.
The bottom line is that ordinary people avoid paying taxes, because they do not see the system as transparent.
People know that most of their tax money, if paid, will fill Cyprus bank accounts of those filthy rich officials and oligarchs. Leaked glimpses into bizarre lives of those in power – their Byzantine-style mansions, toilets of gold and ostrich skin shoes – shock and outrage.
It might come as a surprise to some members of parliament that Ukrainians are poor. Even though many of them are paid salaries in envelopes unofficially, the income of most people is low. With high prices for food and other necessities, not to mention apartments, children are a luxury for most.
People live in uncertainty about the future and, with little positive changes for the last 20 years. For many it seems like there is no hope for this nation.
That is why no reforms in this country will work, including those trying to increase birth rates, until kleptocracy, corruption and taxation are as simple and fair as possible.
That is why not even increasing payments for children to Hr 25,000 helped demographic situation in Ukraine. Nearly 70 percent of Ukrainians think that more people will have children if their incomes are higher, according to the survey by The National Institute for Strategic Studies, while nearly 50 percent named improvement of living conditions and almost 25 percent cited improving conditions for parenthood and professional life. Only 21.8 percent thought social payments for newborns would help.
In developed countries, whose future looks brighter than ours despite all the crisis buzz, the problem with low birth rates is partially solved by immigration. But not even our own citizens want to live here, given all the above, much less immigrants.
The globalized world that we live in is quite an overpopulated place. However, even in the most overpopulated countries, the results of government’s strong involvement in birth control remain questionable.
Take China and India, the two most populous countries in the world. While China has a strict one-child olicy, democratic India does not. Result?
China has population growth rate of 0.6 per cent (in 2006), and India 1.76 percent (during 2001–2011), which is down from 2.13 percent n the previous decade. Conclusion?
Somehow, with a general increase in standards of living and family planning, the situation is improving without governments stepping in to regulate the breeding of its people as if they were livestock.
Kyiv Post staff writer Svitlana Tuchynska can be reached at [email protected]
