Ukraine has been affected hard by the COVID-19 epidemic. At the same time, rich Ukrainians only became richer during this time. Is there a mechanism for the rich from the Forbes list to help ordinary people and abandon slogans of abstract solidarity for human sake?
Solidarity. Human one
The COVID-19 pandemic has been a challenge to societies, economies and public finance in all countries of the world. It is also a test for state administrations and their ability to overcome the crisis.
Many people on all continents have significantly suffered from the spread of the disease, which has resulted in not only threatening their lives and harming their health, but also in many cases losing jobs and falling incomes, increasing poverty and amplifying inequality between and within countries in terms of income, property, opportunities, access to public services, and most importantly, the vaccination process.
The pandemic has been a real challenge for the domestic economy, society and government. In this special period, when it is unknown what consequences the pandemic will have on people’s lives and countries, governments, state institutions have become centers of public attention and hope. It is true that the future of the state depends on their decisions and actions, as “political scarring” may have tragic consequences for the statehood of many countries.
Recent studies indicate that weak states require much more time to implement anti-epidemiological measures of not only economic, social, but most importantly, health care nature. In this regard, the civil society questions the ability of such states and governments to act and respond adequately to current challenges. The most tragic thing is that such frustration, despair in the actions of state institutions, in political leaders is felt by young people of “the most vulnerable (emotionally – author) age” (18-25 years), as they are the innovative core of society, they are the key to stable the existence of the country in the future.
World experts note that the pandemic is a test of society for solidarity, cohesion and effectiveness of state action. Given this, the restoration of public confidence in the actions of the state, its institutions, and the health care system is a key prerequisite for their further normal functioning, our hopes and expectations for the development of Ukrainian statehood.
Therefore, in our country, one of the tests of solidarity and the main way to restore confidence in the state and our political leaders is the implementation of a wealth tax. After all, Ukraine is a poor country in official terms (GDP per capita, income per capita income, etc., and especially if we compare in international terms), but in our country there is a sufficient number of extremely rich people, whose source of income and wealth in many cases is national natural resources, power, assets acquired during preferential privatization.
A ranking of the richest Ukrainians was recently published in Forbes magazine, which estimates the wealth of the richest people according to a method that is improving, but has been stable since 1987. Experts of this magazine note that the wealth of the richest Ukrainians in 2020 surged by 42%.
To assess the assets of the 100 richest Ukrainians, Forbes experts estimated “the wealth of more than 200 millionaires, more than half a thousand of their businesses, as well as their real estate in Ukraine and abroad”. The list includes only citizens of Ukraine. A businessman’s wealth is an estimate of the value of his/her assets: stakes in public and private companies, real estate, vehicles, art, cash in hand and bank.
Thus, the total wealth of Top 100 Wealthiest People of Ukraine, according to Forbes, is USD 44.495 billion, the average value in this sample is USD 445 million, the largest – USD 7.6 billion, the smallest – USD 125 million.
In the case of the introduction of a wealth tax of 1%, the amount of potential tax revenues in terms of the official exchange rate of hryvnia/dollar can be about UAH 12 billion per year!
The fiscal efficiency of such tax will usually depend on many factors, and primarily, the model of the tax and the chosen means of its administration. Most importantly, it will contribute to the structural transformation of the national tax system, its greater progressivity, and hence the fair distribution of the tax burden between groups of people with different incomes.
More details are in our study “Wealth Taxation in Ukraine: A Test of Solidarity”.
Doctor of Economics, expert of the Growford Institute Kostiantyn Shvabii for 24tv.