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Are We In Power To Do the Pension Reform?

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From October 1, 2017, pension reform will start. However, public debt is rising, and in 2018 it is necessary to start settling accounts with the IMF. Hence here is the question: at what expense could one increase pensions?

In a commentary to ‘Espreso TV’, CASE Ukraine`s Senior Economist Vladimir Dubrovsky noted that, in the solidarity pension system, the contribution is perceived not as a voluntary act, but as a retention of money under the control of the fiscal service.

In his view, employers are not encouraged to pay unified social tax, so it should be replaced by taxes on the use of resources – on land and real estate. These revenues should be sent to the Pension Fund.

It is possible to fill the Pension Fund, as the government plans, says the expert. However, this can have negative consequences for the economy as a whole.

The economist notes, if one makes mincemeat out of the economy, then you can fill the treasury. Money can be knocked out, but this will lead to more people fleeing to Poland for earnings, business is being wiped out. It is possible to rely on unified social tax in the short term, but the price will have to be higher.

June 8, 2017