Quick reduction of taxes in Ukraine could lead to wider deficit - IMF
KYIV. Oct 28 (Interfax) - Ukraine should cut tax rates in the Tax Code gradually to avoid running the risk of increasing its budget deficit, Max Alier, the Resident Representative of the International Monetary Fund (IMF) in Ukraine, said at the First Tax Forum in Ukraine organized by the council of independent accountants and auditors with the support of the State Tax Administration of Ukraine.
He said that the IMF welcomes the Tax Code, which he said would improve business environment in Ukraine. The IMF welcomes the reduction of tax rates, although on the other hand, the tax rate reduction should be gradual, as if the reduction were quick, the risk of large deficit could appear, he told the press on Thursday.
He said that IMF experts are in talks with Ukrainian officials. The fund provides for international experience in taxation reforms.
"Tax incentives are good, but they should be balanced with the objective of financing the government," he added.
Alier said that it is important to provide a fair distribution of the tax burden among all parts of society, and any reduction in taxes should be accompanied by an expansion of the tax base.
He also said that the date when the Tax Code was finally shaped should be the result of a compromise between business and the government.
As for the expected arrival of the IMF Mission to Ukraine, Alier said that his colleagues would analyze the impact of the Tax Code on the economy and state finances, discuss the 2011 budget, and study the results of the banking recapitalization program.