Business calls for the first step towards eco-tax reform

30/ 06/ 2020

Tomorrow, July 1, there will be a meeting of the Verkhovna Rada Committee on Environmental Policy and Nature Management to discuss the issues of eco-tax reform. Thus, the agenda includes a series of draft laws aimed at stimulating the reduction of pollutant discharges into water facilities, air emissions, and waste disposal. These are draft laws № 3543-1, №3631 and №3632.

The abovementioned draft laws provide for a few amendments to the Tax and Budget Codes, as well as other legislative acts of Ukraine, which, in fact, are aimed at reforming the mechanism of collection and use of eco-tax. In particular, the following 4 components are important:

  1. compensating up to 70% of the company’s expenditures on eco-modernization and environmental protection (thus, environmental funds will be allocated to specific company’s projects in such regions where real improvements are needed)
  2. abolishing the CO emissions tax (it should be noted that this tax does not exist in Europe according to the Association Agreement);
  3. gradual increasing eco-tax rates, except for CO2 and waste disposal taxes, by 20% gradually over several years starting in 2021 (since the CO2 tax was already increased almost 25 times last year, now it is important to ensure targeted use of funds, while the waste disposal tax will be regulated by another draft law);
  4. ensuring the allocation of eco-tax revenues to the special fund of the State Budget. The allocated funds should be used exclusively for environmental purposes.
The business supports a comprehensive approach to eco-tax reform, which should perform not only fiscal but also stimulating and compensatory functions. At the beginning of May, we have already submitted our proposals to the Government and the Parliament, because while the rates are currently increasing tenfold, the funds are used inefficiently and dissolved in the budget. According to business, these three draft laws prescribe the regulation of environmental taxation quite precisely, as these three reforms are the priorities now - to gradually adjust the eco-tax, to promote the targeted use of funds, to harmonize Ukrainian legislation with European standards.

Therefore, business calls on the respective Verkhovna Rada Committee to recommend to the Verkhovna Rada to adopt draft laws № 3543-1, №3631 and №3632, which will help achieve effective and real environmental improvements so that the Verkhovna Rada can consider and vote on them at the next sitting.

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