The document summarizes a public debate held in Ukraine on whether the country should introduce tax reform despite its current economic crisis. There were speakers both for and against the motion. Those for argued that reform is needed now to simplify the tax system and increase competitiveness, which could stimulate economic growth. However, others believed the government and economy currently lack stability and that incremental changes may be preferable to major reform during a crisis. The debate aimed to discuss these perspectives and increase public awareness of tax reform issues in Ukraine.

1. www.debaty.org
PUBLIC DEBATE:
UKRAINE SHOULD INTRODUCE TAX REFORM DESPITE THE ECONOMIC CRISIS
9 September 2009
On the 9th of September, the Foundation for Effective Governance, in partnership with London
based Intelligence2, conducted a public debate on the motion: ‘Ukraine should introduce tax reform
despite the economic crisis’. The foundation considers the 3 main aims of any prospective reform to
be:
 A decrease in standard tax rates, accompanied by an increase in the taxable base;
 Simplification of tax procedures;
 Tax administration reform.
Ukraine occupies the 181st position among 183 countries in the World Bank’s Doing business Tax
System Competitiveness ranking, which has strengthened the consensus for radical tax reform in the
country. However, the current economic crisis has produced diverging opinions over the timing of
introducing any such reform. Some argue that as the current crisis exacerbates negative effects of tax
inefficiencies, it creates a momentum for change. Others believe that a prerequisite to the
introduction of any fundamental changes to the tax system must be a stable economic and political
environment. Thus, a dilemma emerges where on the one hand, tax reform may stimulate capital
inflow, release entrepreneurial potential and limit corruption, and so produce tax revenue
growth, while on the other, it may diminish system flexibility and lead to a further depletion of the
budget during the implementation stage, which in view of the crisis could be detrimental .
The debate was intended to provide a platform for a constructive discussion of these competing
theories, in which major political players, economic experts, and members of the public could
participate. The Foundation is also hoping to increase public awareness of the issue of tax reform in
today’s Ukraine.
Speakers FOR the motion Speakers AGAINST the motion
Olexander Kirsh Bill Emmott
Economic Advisor to the Governor of Chief editor of The Economist journal in
the Kharkov Region, Chief editor of 1993-2006, independent writer and
the Accountant Journal consultant
Lord Nigel Lawson Leonid Rubanenko
Finance Minister of Great Britain in President of the Ukrainian Union of
Margaret Thatcher’s Tax Consultants, Head of the Civil
Government, 1983-1989 Chamber at the Rada Tax Committee
Tatiana Efimenko Sergey Vlasenko
Head of the Economics Department MP, Representative of the National Tax
at the Institute for Economics and Administration at the Rada, Hons.
Forecasting, NASU, Deputy Finance Lawyer of Ukraine
Minister of Ukraine, 2006-2008

2. Key Statements
Olexander Kirsh: “The reform is to be conducted Bill Emmott: “You do not have a strong enough
not in spite of the crisis but because of it as the government to force through tax reform and to
crisis multiplies the limitations of the Ukrainian persuade the nation to compromise, as any tax
tax system… we have to simplify the system.” reform involves trade-offs… as for now you can
make incremental tax changes if necessary.”
Tatiana Efimenko: “Tax reform must be delivered Leonid Rubanenko: “Ukraine’s government
for Ukraine to regain its position in the world currently lacks 3 essential preconditions for
economy… international competitiveness is the successful tax reform: political will, skilled
way out of the crisis!” administrative staff and public support.”
Lord Nigel Lawson: “You cannot achieve all at Sergey Vlasenko: “The prerequisite for tax reform
once, but you should begin the process of reform is political and economic stability, we lack both.
now, and you will see how the economy will Therefore, we should instead concentrate on
become more dynamic and foreign investments adjusting current tax system to the challenges
will return to Ukraine. You can’t afford not to do posed by the crisis.”
it!”
Q&A Session and the Audience Comments:
Q: Yuriy Vorapaev, MP: “In the absence of political will on behalf of the government to design tax
reform, why don’t we engage economists and parliamentarians for the purpose?!”
A: Tatiana Efimenko: “We should definitely collaborate as tax reform is central for Ukraine to retain
international competitiveness.”
A: Sergey Vlasenko: “Let’s just not mess up reforms and amendments.”
Q: Igor Shumilo, Executive Director, Economic Department, NBU: “Is it possible to decrease the tax
burden without sacrificing social obligations?”
A: Lord Nigel Lawson: “In the UK tax revenues increased when we lowered tax rates, as the
economy revitalized.”
A: Olexander Kirsh: “In order to avoid the risk of decline in budget revenue we should focus on
elimination of unprofitable inefficiencies in the current tax system for the reform agenda.”
Q: Nick Pizani, CEO of Intellegence2: “I’d like to ask Bill Emmott, if world economic situation
improves when exactly should Ukraine conduct tax reform?”
A: Bill Emmott: “Economic crisis is not relevant to the question of tax reform in Ukraine, the political
crisis matters!”
Comments: Nikolay Katerinchuk, MP: “We currently have all the conditions to conduct tax reform
that focuses on decreasing the tax burden and improving tax administration!”
Voting Results We would appreciate your participation in our next Debates
to be held on 05.11.2009
Motion: Decentralisation will increase
competitiveness of the regions
Venue: Teacher’s House, 57 Vladimirskaya str.
Start time: 15:45
Further information and the full version of the debates can be
found on:
www.debaty.org
www.feg.org.ua
FEG, 23-F Kudryavskaya st., Kiev, 04053, Ukraine
tel: +380 44 501 41 00
feg@feg.org.ua