Ukrainian lawmakers fail to increase minimum income level

Thursday, June 2, 2016 - 16:38 (EEST) Section: Latest news

Ukrainian lawmakers did not support a bill envisaging an increase in the minimum income level, the cancellation of pensions taxation and limitations on pension payments to working pensioners.
Bill No. 4316 on amendments to the law of Ukraine ”On the State Budget of Ukraine for 2016” (in part of social payments) was supported in the first reading by 163 votes with the required minimum of 226 votes.
Leader of the Batkivschyna Party and the party`s faction in parliament Yulia Tymoshenko, who is one of the initiators of the bill, stated when presenting the bill that the 2016 budget adopted at the end of last year envisaged the reduction in social standards, particularly for working pensioners and low-income families.
”The bill that has been adopted as the budget is terrible and needs to be revised urgently. Our bill being balanced on the revenue and expenditure sides completely eliminates all the shortcomings, and we suggest that it should be adopted in the first reading,” Tymoshenko said.
Chairperson of the subcommittee on state budget expenditures of the Verkhovna Rada Oleksandr Horbunov said that the parliament`s committee on budget was not able to consider this bill. At the same time, he pointed to a need to receive the government`s prior confirmation of budget expenses that are envisaged in the bill. He also stated that according to the applicable law the minimum income level and the minimum wage can only be established by a government bill.
As noted in an explanatory note to the bill, the draft law provides for a 5% increase in the minimum income level, the minimum wage and the minimum pension in 2016, which is believed to help start the process of their adjustment to reasonable levels in accordance with the methodology of the year 2000 during a ten-year period.
It is also proposed to abolish the taxation of pensions and limitations on payments of pensions to working pensioners, who are currently entitled to 85% of their estimated pension amount. The initiators of the bill propose that allowances for children from low-income families should be increased from 85% to 100% of the minimum income level.
The document states that funding of vocational schools and other educational institutions should be transferred to regional budgets and the Kyiv city budget.
It is noted that the proposed changes will increase state budget expenditures in 2016 by UAH 43.8 billion. They are planned to be compensated by means of higher earnings from personal income tax and single social security tax, including as the result of legalizing the shadow economy, as well as revenues from the National Bank of Ukraine, the increase in tax on dividends from 5% to 18%, and the balances on the treasury single account.
As UNIAN reported earlier, on May 19, the Verkhovna Rada of Ukraine adopted in the first reading the government`s bill to abolish taxation of pensions exceeding the minimum wage by more than three times, which has been effective since March 2014. It was planned to include a provision on taxation of higher pensions by the time of the second reading of the bill.
Also, the Verkhovna Rada passed a government bill to amend the state budget envisaging an increase in social standards starting from December 1, 2016, by 10% instead of 6% as originally planned.
At the same time, Prime Minister Volodymyr Groysman said that social standards might be reviewed again in the current year.