Wednesday, December 08, 2010

Ukraine: Key reforms to tackle corruption

Ukraine's President Viktor Yanukovych and his administration embark on implementing four key reforms, namely, tax, administrative, anti-corruption and pension reforms. This announcement was made by the President and his key staff members during the last four days following the signing of the tax code, a milestone development in the fundamental tax reform.

In the coming days the President and his team plan to announce the launch of additional three reforms. The draft laws are currently being prepared by the President's administration and relevant Ministries.

The first step in this process was taken last week, when the President signed the Tax Code into law. Adopted after a long public discussion with the representatives of national business, the so-called "Ukraine's tax bible" will come into effect as early as January 2011. The number of taxes will be reduced from 42 to 23. The main tax rates (income tax and VAT) will also be decreased.

Pension reform is another key priority. As the Ukrainian population is aging and the Pension Fund's deficit is growing, the government plans to gradually increase the retirement age for women from 55 to 60. This unpopular measure, also faced by many EU countries, is to be introduced by a new law drafted by the President's administration. The deficit of the Pension Fund of Ukraine is now 60 billion Ukrainian hryvnias (approximately 7.5 billion USD). The ratio between the working and retired people is also getting dangerous: 17 million working people compared to 15 million retirees.

The anti-corruption provisions are foreseen by the National Anti-Corruption Strategy for 2011-2014. Among others, the package includes such measures as securing control over the financing of the political parties and public control over the public funds expenditure. Ukraine was obliged to adopt anti-corruption legislation as a condition for entering the GRECO group (The Council of Europe's Group of States against Corruption).

The administrative reform, in its turn, is to reduce by more than a third the number of public servants by shutting down one third of the existing Ministries. Presumably, this reform will be foreseen by the state budget for the next year, which is to be approved by no later than 24 December. A special draft law is also prepared by the President's administration.

SOURCE Worldwide News Ukraine