The Bill (Reg.No.1032) proposes that allowances or compensation (apart from wages or other compensation under Civil Agreements), effected by Trade Unions to its members throughout a year, are not included in the taxpayer´s total monthly or yearly taxable income (ie are not subject to taxation), provided that the aggregate amount of the said allowances/compensation does not exceed the cost-of-living allowance for an able-bodied person, as of 1 January of the reported fiscal year, multiplied by 1.4 and rounded up to the nearest 10 Hryvnias. This provision is applied to all Trade Union members without any additional condition.
During the discussion, the Committee Chairman, Serhiy Teriokhin, stressed that ‘implementation of this provision can result in noticeably decreased revenues to Local Budgets, since the size of payments/compensation, effected by Trade Unions, will be relieved of taxation under new proposals, irrespective of the income level of a Trade Union member in receipt of them, and are only limited by the amount specified in the Bill´.
Committee members also took heed of the absence of any financial and economic substantiation behind the Bill.
Furthermore, the Budget Code stipulates that any additional State Benefits reducing the revenues of Local Budgets used towards exercising their Authorities, require the relevant alterations in the Law on the State Budget of Ukraine for the current fiscal year, ‘to provide for subventions towards the compensation of respective losses in Local Government Budget revenues.´. ‘Whereas the Draft State Budget 2008 has been calculated using the current income base, it will not include the required compensations to Local Budgets, should this Bill be adopted by Parliament,´ added S. Teriokhin.