2009

Public hearings of the Kyiv State City Administration on sumptuary tax levy

21.01.2009

20^th January at 7 pm in the Kyiv State City Administration the public hearings on application of fee levy on luxury goods were held. Head of the Kyiv State City Administration Leonid Chernovetsky, members (deputies) of Kyiv State City Administration, members of Parliament of Ukraine, representatives of business, lawyers and citizens – Kyiv inhabitants took part in the discussion. According to the initiative of the Kyiv mayor it has been suggested to impose taxes upon such objects of luxury as luxurious cars, yachts, airplanes and helicopters, as well as usage of objects of luxury in city area – such as chartering yachts, flight over the capital, etc.

Oleksandra Pavlenko, attorney-at-law, partner with Pavlenko& Poberezhnyuk, Law group, reported on the public hearings about contradiction of the regulation project of the Kyiv State City Administration on sumptuary tax levy with the Constitution of Ukraine as well as with the Taxation Law of Ukraine, in particular article 92 of the Constitution of Ukraine, article 1, 18 of the Law of Ukraine “On local taxes and levies”, article 1 of the Law “On taxation system”.

"Imposition of new tax within the territory of the city is impossible based only on the order of mayor. Such process would mean, from one side, exceeding of official authorities of the local authority, moreover it would sufficiently violate the taxation system and procedure of its changing. Besides, it would obviously violate the principal of balance in the taxation system, as the citizens of different cities would appear in different situations. Imposition of new taxes is possible in virtue of laws, which apply on all territory of Ukraine or changes in fact the taxation position of the residents of a certain territory. However, the right remains solely by the Parliament of Ukraine. Local authorities have the right to establish and determine order of payment local taxes and charges independently, but upon condition of its presence in law".

In November 2008 Party of Regions (project authors – Members of Parliament of Ukraine German G.M., Myroshnychenko Y.R., Boyko Y.A.) presented to consideration to the Parliament of Ukraine law draft “About sumptuary tax” (#3405), which foresees tax assessment of goods, activities and services taxation, which consider to be luxurious as well as determines the order of sumptuary tax payment. In December 2008 The Cabinet of Ministers of Ukraine presented to consideration the draft Law of Ukraine with similar provisions – “about tax on real estate, different from a land plot” (#3533). So far, there were no considerations of any of the law drafts by the Parliament of Ukraine.