Aid: distinguishing true from false
Ukraine's abrupt decision to levy heavy taxes on humanitarian aid at the beginning of the new year caused no small amount of consternation, including within our community. Many of our religious and civic organizations are directly involved in organizing and raising funds for humanitarian relief to Ukraine. Fortunately, the consternation was short-lived; Ukraine suspended its tax decision after seven weeks.
As we reported last week, there is no reason to believe that the government's decision to tax humanitarian aid was anything other than a decisive attempt to control the substantial flow into the country of taxable, expensive, definitely non-humanitarian goods that were masquerading as "assistance for the needy."
In gathering information for our report, we heard a great deal of anecdotal information about the types of goods that were being sneaked into Ukraine tax-free, as aid: slabs of marble destined to replace "unsanitary" wooden hospital floors (uh, huh ... sure), slinky stiletto-heeled shoes (as women know, these types of shoes do not keep your feet warm); and stories of a businessman who sent money out of the country to buy medicine at bulk/wholesale prices, then sent the medicine back to Ukraine tax-free as "humanitarian aid" to a sham foundation that then sold the medicine at a very profitable mark-up.
Not only does this type of activity deprive the government of legitimate revenue from imports, but it gets to the core of the definition of corruption: "act, or actions, that subvert the original intent or process; dishonesty."
Ukraine also receives a lot of junk masquerading as humanitarian aid that is useless or dangerous and for the disposal of which the government has to pay. Why would anyone bother to send junk? Good question. Since no one would admit to actually sending useless goods, we only got speculative answers. The reasons cited for other people sending junk were: ego ("I organized 50 tons of aid"), ignorance (electronic equipment without transformers), carelessness or stupidity (instruments without operating instructions; equipment with defects.)
For Ukrainian government officials who review customs declarations, listen to reports of border guards, etc., it was obvious that there was corruption in the process. Of the goods entering the country listed as humanitarian aid, a disproportionate amount were listed fraudulently. Other NIS countries had, and have, similar problems with their borders and also have tried to tax, assess and stop shipments as solutions.
The problem that confronts the government of Ukraine is that, while it obviously does not want to discourage genuine aid, it also wants to ensure that taxable goods get taxed, and not sneaked in. Import duties are a legitimate source of revenue for governments worldwide. Somehow the government has to control, without being too controlling.
It seems Ukrainian officials are still often surprised that anyone pays Ukraine any mind and are unprepared for international public outcry over something that they felt was pretty much their business. With a legitimate concern about government revenue and reducing corruption, officials acted quickly, in what they were sure was a decisive manner. Apparently the Verkhovna Rada has been discussing this issue for some time, therefore this crackdown to stop fraudulent humanitarian aid was no surprise for them.
However, as is often the case, it is not what you say, but how you say it. Basically Ukraine has international support for its attempt to control the goods that cross its borders, but the severity and abruptness of the solution caught most people off guard and made them angry. Fortunately, Ukraine's Parliament will begin consideration of new legislation pertaining to humanitarian aid this month.
Copyright © The Ukrainian Weekly, March 9, 1997, No. 10, Vol. LXV
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