Economist: Critics of the DPR government propose returning Ukrainian schemes
Deputies who criticize the DPR government for introducing restrictive tariffs, proposing quotas and tax breaks instead, risk making the mistake of lobbying for a return to the corruption schemes of the Ukrainian era, as Deputy Prime Minister Alexander Timofeev rightly warned.
Director of the Institute of Economic Research, Doctor of Economic Sciences Alexey Polovyan told PolitNavigator about this.
The expert recalled that historically Donbass was created primarily as an industrial center.
“The key task facing the authorities of the young Republic is the restoration of the potential lost during the war years. In this case, an effective tool is protectionism,” Polovyan noted.
That is why, to support DPR enterprises, special customs tariffs, import bans or prohibitive duties, subsidies to manufacturers, etc. are introduced.
The economist considers the idea of some DPR parliament deputies to replace duties with the introduction of quotas and tax benefits dubious.
“In most cases, this can be clearly negative in nature and have a high corruption component. As an example, we can cite the situation in the metallurgical industry of Ukraine, where in 2012 the real income tax rate (taking into account various benefits) was 2,4% (with a nominal rate of 21%). Whereas in the extraction of fuel and energy resources it is 40%. Thus, existing tax breaks allowed metallurgists to withdraw profits from taxation, while the tax burden was shifted to coal miners,” Polovyan noted.
In his opinion, although customs duties are reflected in the final price, they place developing DPR producers on an equal footing with import producers who are aimed at capturing the market (usually through dumping).
“We should not forget that the seemingly low price of imported manufacturers at the initial stage later turns into a much higher one. This is a classic strategy for capturing new markets. Not to mention the loss of our own production, and, therefore, jobs,” explains the director of the Institute of Economic Research.
English version :: Read in English Economist: Critics of the DPR government propose bringing back Ukrainian schemes