Zero Declaration is the Dream for the Corrupt

MPs are about to legalize corruption profits of our political elite.

Investment banker

What makes the International Monetary Fund dictate so good or why zero declaration is dream for the corrupt.

Here is an example. A couple of inconspicuous MPs from Poroshenko’s Bloc, who are not even invited to television, submit a law draft. They call it zero declaration, but they de-facto want to legalize corruption profits of our political elite. They are even prepared to generously pay 2.5% tax for this privilege.

After the National Anti-Corruption Bureau of Ukraine was founded, before the threat of the specialized anti-corruption court public officials have real fear of going to prison for “illicit enrichment” en masse. So now they would like to legalize the said enrichment.

If we didn’t have the IMF program, so vehemently loathed by the Sovereignty defenders, MPs, who are also supposed to defend the said sovereignty, would pass this law draft in a heartbeat. Just like that. Easy-peasy. Nobody goes to prison. They would also classify the declarations lest the people grow curious before the election. And believe you me, on all the talk-show they would explain in unison that Ukrainians’ income must be legalized.

We all used to be in shadows. Now is time for “the new life”. Now nobody would ever be able to prove that million-dollar fortunes, range rovers or Koncha Zaspa mansions result from corruption. Everything is legal. For the public good.

It won’t happen, though. Just because the IMF won’t let it. The IMF won’t let legalization of income before the State Fiscal Service is reformed. The IMF will for sure oppose corruption income legalization. Without the IMF a law draft like that would be easy to pull through. In the Parliament. And on TV. Nobody is willing to play with fire, however, as the IMF tranche is of crucial importance.

Now, can you answer the question if the IMF is good or bad for Ukraine? Do we need to legalize Ukrainians’ income at all? True, too many Ukrainians worked in grey economy. Still do. We should put a stop to it.

The thing is, it is about those Ukrainians who work in grey economy, not about the corrupt officials that have driven Ukrainians to it. Even after the State Fiscal Service reform, if the IMF is able to pull it through, or rather when the IMF is able to pull it through, nobody should even say a word about legalizing officials’ and politicians’ income on the same basis as other citizens.

The second issue is that income legalization in and of itself is highly complicated. And great responsibility. One thing is for sure, it should not be initiated by some second-rate MPs that nobody even knows what they look like.

First, legalization should be a one-time event. No second chances. Otherwise, nobody will even bother legalizing one’s income. It should go along with eventual increase of tax rate. People should be incentivized to leave the grey economy as soon as possible. Monetary incentive is the one universally understood by people.

Secondly, there must be proofs of the declared assets. For instance, if one declares a million, he or she should be ready to produce the said million when asked about it, that is, put it in the bank account. This should be a guarantee against declaring “future incomes”. Otherwise many will be tempted to try partial legalization, continue getting shadow income reducing its tax from real rate to declared level.

Thirdly, there should be limited circle of declarants, no politicians or officials.

Fourth, returning funds from abroad should be incentivized, i.e. reducing tax rate in case of repatriation.

Another important issue is who should do it and when. The former should be trustworthy individuals of integrity. Hence the IMF requirement not to launch legalization prior to the State Fiscal Service reform. As those guys are bound to cause trouble. Another thing, it can be done only post-election, so that people would not be scared to declare their income before the possible government change, when someone may change their mind.

What about the MPs? Judges? Security Service guys? They should probably get a chance as well. They cannot all go to prison, anyway. Firstly, if they don’t want to legalize their income, they should pay not 2.5% or 5%, but at least 50%. Or more. Secondly, if MPs, judges, public officials or law enforcement submit such declaration, they should leave public office for good. They should also give a lifelong vow to abstain from running for parliament. Voluntarily.

Then we would rid ourselves from corrupt officials, making them pay in the process. This kind of game is worth the candles. Not the inverse scenario that the MPs are trying so hard to sell. When they get to keep their positions of authority, but without fear of going to prison for their corruption activities and the necessity to hypocritically hide their fortunes.

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