Business accepts with regret increased taxation disguised as an increase in the minimum wage – EBA

25/ 08/ 2020

Today the Verkhovna Rada adopted as a whole the draft law No.3963 that increases the minimum wage to 5 thousand hryvnias from September 1, 2020. Anna Derevyanko. EBA Executive Director. The business accepts the decision made today with regret. In August, as soon as it became known about the intention to raise the minimum wage, the community opposed the initiative and called for dialogue in this context. However, unfortunately, there was no reaction to the proposal of honest taxpayers. We can see today that if there is an aspiration, decisions can be made quickly enough. So, I would very much like a similar speed on considering the proposals that are systematic and fundamental for the business and the country. Especially on issues that directly and painfully affect the business activities in times of crisis, difficult for entrepreneurs. The decision made today can be interpreted as the unwillingness of the state for a constructive dialogue. It is worth noting that this decision will hurt the most honest taxpayers who conscientiously pay wages to their employees. At the same time, those businesses that legally pay the official salary much higher than the minimum will also be affected. Besides, increased tax pressure on wages, particularly during the economic crisis, will stimulate the growth of the shadow wage sector. And in the worst case - will increase the pressure on honest payers from government agencies. Therefore, these consequences can hardly be called positive for the business, citizens, and the country as a whole. The crisis has affected the entire business community, so now it is important to support companies, rather than create additional barriers to transparent business. This draft law is not part of systemic initiatives to support the business, but, conversely, it can even deepen the crisis. Therefore, the European Business Association appeals to Volodymyr Zelensky, President of Ukraine, not to sign this draft law as it increases the tax burden on honest taxpayers. At the same time, the community will insist on at least a proportional reduction of the maximum size of the single social contribution accrual base to prevent an increased burden on honest payers. However, we hope that the authorities will demonstrate the capacity for meaningful dialogue, and together we will be able to work out a compromise solution to the current situation. Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

Today the Verkhovna Rada adopted as a whole the draft law No.3963 that increases the minimum wage to 5 thousand hryvnias from September 1, 2020.

Anna Derevyanko EBA Executive Director

The business accepts the decision made today with regret. In August, as soon as it became known about the intention to raise the minimum wage, the community opposed the initiative and called for dialogue in this context. However, unfortunately, there was no reaction to the proposal of honest taxpayers. We can see today that if there is an aspiration, decisions can be made quickly enough. So, I would very much like a similar speed on considering the proposals that are systematic and fundamental for the business and the country. Especially on issues that directly and painfully affect the business activities in times of crisis, difficult for entrepreneurs. The decision made today can be interpreted as the unwillingness of the state for a constructive dialogue.

It is worth noting that this decision will hurt the most honest taxpayers who conscientiously pay wages to their employees. At the same time, those businesses that legally pay the official salary much higher than the minimum will also be affected. Besides, increased tax pressure on wages, particularly during the economic crisis, will stimulate the growth of the “shadow” wage sector. And in the worst case – will increase the pressure on honest payers from government agencies. Therefore, these consequences can hardly be called positive for the business, citizens, and the country as a whole.

The crisis has affected the entire business community, so now it is important to support companies, rather than create additional barriers to transparent business. This draft law is not part of systemic initiatives to support the business, but, conversely, it can even deepen the crisis.

Therefore, the European Business Association appeals to Volodymyr Zelensky, President of Ukraine, not to sign this draft law as it increases the tax burden on honest taxpayers.

At the same time, the community will insist on at least a proportional reduction of the maximum size of the single social contribution accrual base to prevent an increased burden on honest payers.

However, we hope that the authorities will demonstrate the capacity for meaningful dialogue, and together we will be able to work out a compromise solution to the current situation.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.