The Ministry of Agrarian Policy offers to introduce a temporary 10% tax on agricultural imports. Not only Ukrainian authorities have to approve this tax, but also the WTO and EU.
Ministry of Agriculture is once again caught working up how to protect domestic producers. To this purpose, the Authority offers to introduce a new tax in the beginning of 2011 – a temporary agricultural fee of 10%. The validity of the new tax is three years up to the end of 2013. According to the Authority, imported pork, poultry, meat offal, fish and crustaceans, as well as herbicides should be taxed. Funds collected from importers are expected to be sent to a special fund of the State Budget. The Ministry of Agrarian Policy will be in charge of this money disposal.
For a new tax to become valid, the approval of the Cabinet and the Parliament is not enough. The key issue is to coordinate the introduction of the new tax to commitment to the WTO. There also may be issues with products import from the European Union. "Ukraine is currently negotiating to establish free trade zone with the EU. Introducing the 10% duty on imports obviously contradicts these norms", says Elizaveta Sviatkivska, analyst of the Ukrainian Agribusiness Club: "It’s possible to make an exception for the EU countries. However, it is important to understand that over 50% of pork is imported from Europe ", she says. It is worth mentioning that the Parliament has previously considered the introduction of agricultural collection in 2009. Then the decision was not approved.
Ukrainian producers are not against
Manufacturers of sausages, which are key consumers of imported pork and chicken, are against the new tax introduction. According to Denis Paramonov, "Saltivskii Meat Plant" CEO, the share of imported raw meat in the processing is currently about 80%. "The reaction to the increasing cost of raw materials will be the prices growth of final products. They can grow by 5-7% ", Paramonov says. Nevertheless, the decision to impose additional 10% are supported by domestic producers.
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