The scandalous tax amendment and efforts to aggravate mutual distrust in the opposition
In detective stories, a multi-way intrigue is when every action inevitably evolves into an entire chain of other ones. In life, a multi-way intrigue opens the door to new options. On October 24, the Verkhovna Rada (VR) used one: it passed draft law No. 2054a “On Amendments to the Tax Code of Ukraine Regarding the Registration of Taxpayers”. Despite the innocent title, one provision of the draft law in Article 170.11.1 has stirred a scandal – “…an individual that has a permanent residence permit in a foreign country shall be considered a non-resident of Ukraine”.
Formally, this is only “for tax purposes”. The opposition, however, realizes that the amendment may be used to prevent UDAR’s leader, Vitaliy Klitschko, from running in the 2015 presidential election. The Ukrainian Constitution requires candidates for the presidency to reside in Ukraine “for ten years prior to the election year”.
The Klitschko brothers have residence permits in Germany where their promotion business is based. It is no secret that this could actually be a serious obstacle to Vitaliy Klitschko’s presidential aspirations. The media buzzed about this for a while. Klitschko himself said at the beginning of 2013 that he has lived in Ukraine for six years after 13 years in Germany. However, his internal Ukrainian passport does not indicate a change of propyska - residence registration - since 1992. After the amendment was passed, he made an important statement: “I’m going to run for the presidency!”
The first red flag in the scandal was the haste with which the government pushed through amended draft law 2054a. On October 8, 337 MPs approved the basic government-sponsored document. On October 23, it was returned for review to the VR Tax and Customs Policy Committee (Tax and Customs Committee) before the second reading next day –it now had numerous amendments.
Lawyers barely had time to analyze it before it was handed out to MPs on October 23. As a result, most legislators had no idea that they were now voting for something different from the draft law they had passed in the first reading two weeks earlier.
Then, VR Speaker Volodymyr Rybak put the whole bill up for vote instead of each amendment, including the notorious tax amendment, individually. The opposition went into an uproar but that did not help. Rybak signed it on the same day and immediately sent it to Yanukovych. So it’s more than likely that it will be signed and enacted.
UDAR’s MP Oksana Prodan who is member of the Tax and Customs Committee now insists that the tax amendment was never discussed at the committee meeting. In her appeal to Prosecutor General on this she wrote that “the comparison table with changes in the draft law presented to parliament for the October 24 vote was not the one that was considered at the committee meeting.”
The scandalous amendment was sponsored by Batkivshchyna’s Ihor Brychenko. Obviously, this alerted UDAR MPs, fueling suspicion of a secret plot to kick Vitaliy Klitschko out of the election race, given that he is currently the major obstacle on Arseniy Yatseniuk’s path to the second round. In response to this, Yatseniuk claimed in parliament that the fact of Brychenko’s submission of the amendment was falsified. Brychenko himself said that he did not sponsor any amendments to the draft law. He even confused the document number, referring to it as 2045, not 2054a.
According to The Ukrainian Week’s source, however, Ihor Brychenko did sponsor the amendment. He tried to recall it on the morning of October 24 but failed. Vitaliy Khomutynnyk confirmed this in parliament, saying that Brychenko had submitted 31 amendments, then “expressed the desire to recall some of them”. After the close of the day’s session, Yatseniuk confirmed this, too. He told reporters that he and Brychenko had spoken to Rybak at 9 a.m. that day and that Rybak had promised not to put the amendment up for the vote.
It is surprising how easily Speaker Rybak tricked the opposition, despite being known for breaking laws and his own promises on many occasions. It is surprising that they believed him to the extent that they did not expect the draft law to be put up for the vote in its entirety and were not prepared.
This was yet another blow to the image of Batkivshchyna and Yatseniuk, and Party of Regions’ MPs swiftly zeroed in on the “split in the opposition” in their speeches.
THE SCALE OF THE THREAT
If the government decides that the Tax Code amendments are not enough, it could also amend the Law “On the Freedom of Movement and Free Choice of Place to Live”, preventing Vitaliy Klitschko from registering as a candidate. But Klitschko has tools to counter this, too.
A serious argument in Klitschko’s favour is the European Court’s decision on Major Melnychenko dated October 19, 2004. Back then, Melnychenko was not allowed to register as a parliamentary candidate based on the residence factor. The Court found that “the requirement of residence in Ukraine was not absolute and that the domestic authorities, in allowing or refusing registration of a particular candidate, were obliged to take into account his or her specific situation. The Court considers that neither the relevant legislation nor practice contained a direct eligibility requirement of “habitual” or “continuous” residence in the territory of Ukraine. Furthermore, no distinction was made in the law between “official” and “habitual” residence on the territory of Ukraine.”
The ECHR also observed that “the only proof of legal registration of residence in Ukraine at that time was in an ordinary citizen's internal passport, which did not always correspond to the person's habitual place of residence. The Court further noted that the propyska was an integral and fundamental aspect of the Ukrainian administrative system and was widely used for a number of official purposes (such as the registration of the citizen's current place of residence, conscription, voting and various property issues)”.
It is clear, however, that the argument about Klitschko paying taxes abroad will be used more and more often in political mudslinging as the election nears. The Party of Regions’ Hanna Herman and Vadym Kolesnichenko announced in parliament that Klitschko feeds those who “killed our people” and “plundered our land” by paying taxes in Germany. This was clearly an overreaction. Ms. Herman is known for her love of German cars, so she and people like her support the German economy no less than people like Klitschko do.
Last but not least is how many opposition politicians interpret the notorious amendment: the government needed it to disrupt the passing of draft laws to release Yulia Tymoshenko, among other things. This would mean the disruption of the Association Agreement. An UDAR MP told The Ukrainian Week that “One Party of Regions’ MP approached me personally and told me: ‘don’t give up, block parliament!’ They wanted us to disrupt the session, then accuse the opposition of preventing Tymoshenko’s release”.
This could indeed have been the purpose of the scheme. After all, the opposition did not block parliament but is still blamed for the delay in the Tymoshenko issue. When this article was written, Speaker Rybak asked foreign ambassadors to “communicate to their governments” that it is the opposition that is hampering the release of Tymoshenko. However, both the three opposition factions, and the Party of Regions – a total of 367 MPs – all voted to postpone the consideration of draft laws on Tymoshenko’s release until the beginning of November. The most obvious reason for the Party of Regions’ reluctance to consider this issue on October 25 is the following: at that time, President Yanukovych had not yet managed to talk to Russian President Putin about what Russia would be ready to do in return for Ukraine’s refusal to sign the Association Agreement with the EU. The tax amendment could have been a convenient means to buy time.
Batkivshchyna and UDAR MPs comment on whether the Brychenko amendment fueled squabbles in the opposition
Serhiy Sobolev, Batkivshchyna
This was yet another attempt to fuel conflicts within the opposition but it had the opposite effect. In my opinion, the teams worked well. Moreover, it was obvious immediately that the Party of Regions had planned the whole scheme and was interested in it. Plus, it took place alongside a number of other actions. Against Tymoshenko. In fact, a declaration was made during those days that there would be no pardon or amnesty for her. That there would be no law other than the one to allow her treatment abroad. Klitschko basically said that he was prepared to continue all negotiations to agree on one opposition candidate. It was emotional at first, but then… a statement followed that this would not harm the single candidate, and this is true. So, the opposition has no controversies on this. Our opinions remain valid. If the law changes to have a one-round presidential election, the single candidate will run. If it doesn’t, all candidates are ready to support the one who will win the first round. I think our stance remains unchanged.
Oksana Prodan, UDAR
Vitaliy Klitschko’s statement should put an end to the government’s insinuations and provocations. It will do no harm to the opposition’s agreement. Moreover, we already hear Yatseniuk and Tyahnybok state that they understand and support Vitaliy Klitschko. I have already filed an appeal to Prosecutor General to investigate falsifications during the vote on the draft law to amend the Tax Code. I think it is impossible to miss the blatant falsifications that took place there. I would like to remind you that the President has not yet signed the draft law. He can stop these provocations and falsifications by sending the draft law to repeated voting in parliament.