An article by Oleg Getman, coordinator of the Economic Expert Platform and associate expert at CASE Ukraine, on the steps needed to drive economic growth: deregulation, tax reform, combating the shadow economy, and supporting legitimate business.
Key points:
To transition from a survival mode to economic recovery by 2026, government policy must focus not on ‘ad hoc’ programmes, but on removing systemic barriers. In a study conducted by CASE-Ukraine experts in collaboration with CIPE, key problems that can be addressed now were identified, and expert recommendations were provided on how to minimise them.
Deregulation – this should be systemic, not piecemeal. Simplifying procedures, reducing permits and introducing the principle of “less regulation – more freedom”.
Tax administration reform. Limited timeframes for blocking invoices must be introduced, for example 30 days. During this period, the Tax Service must identify the highest-risk entities among those with blocked invoices and carry out tax audits on them. All others are automatically unblocked upon the expiry of the 30 days.
Addressing the labour shortage – it is essential to develop programmes to encourage the return of migrants, adapt labour legislation to the realities of the war, and invest in retraining staff to meet current market needs.
Protecting legitimate businesses. It is essential to step up the fight against ‘shadow schemes’ and smuggling to create a level playing field. Without this, legitimate businesses bearing the full tax burden will remain vulnerable. Analytical centres estimate the largest shadow economy schemes to be worth 450–550 billion hryvnias, the biggest of which are ‘envelope wages’, ‘grey imports’ and counterfeit goods.
Finally, institutional changes are urgently needed – reforming the State Customs Service, the Tax Service, the Financial Monitoring Service, and so on.