Monday, August 22, 2005

UKRAINE REVENUE UP AS TAX DODGING FALLS, PREMIER SAYS

This is from Bloomberg, by way of the Action Ukraine Report (AUR). The impact of the breaking down of the former Ukrainian government's practices shows the impact of corruption on the economy. Here are some excepts:

"All of the tax rates are exactly the same, yet the revenue received is 1
1/2 times greater,'' Timoshenko, 44, said yesterday in an interview in Kiev.
"This is simply the legalization of the economy, the legalization of
profit.''

"We have radically reduced the amount of smuggling in Ukraine,'' Timoshenko
said. ``As a result, we have increased by at least 2 1/2 times the budget's
revenue from import duties, without any sort of tariff increase -- the
reverse is the case, some tariffs were reduced.''

The government discovered 5 billion hryvnia ($1 billion) were paid out last
year as rebates on value-added taxation rebates that were based on
fictitious exports, calling into question the 2004 figures for GDP and the
trade balance, Timoshenko said.

"Our entire wholesale market had been set up through state finances, and it
was a clearly corrupt system, there was a whole row of middlemen,''
Timoshenko said. ``Now that we have cleaned this all up and are holding
open tenders for every order, for the first time ever in Ukraine, we have a
15 percent decline in wholesale trade: Is this a negative or a positive
dynamic?''

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