Payments on environmental tax are growing but they are not used in Ukraine for environment protection purposes. Most of this money goes to national budget and not to local one, and is spent for anything but not for environment. It is necessary to change the mechanism for distribution and spending of this money as well as to stimulate the companies to invest money in environment improvement, considers Sergey Plichko, Chief Financial Officer of ArcelorMittal Kriviy Rih.
– Our company pays essential money as environmental tax and its amount has been significantly increased in 2019. Last year, total amount of environmental tax we paid was over 223 million UAH, while in Q1 it was increased to 101.2 million UAH including 33 million UAH of the payments for CO2 emissions. I would like to remind you that since January tax rate for carbon dioxide emissions has been increased from 0.41 UAH to 10 UAH per ton. It is 25 times more than the companies paid before. While last year the government received about 52 million UAH for CO2 emissions by fixed sources, this year this amount will grow, by some estimates, to 1.2 billion UAH.
However, these huge amounts will practically have no impact on improvement in environmental situation. In particular, in those cities where big industrial sites are located – Mariupol, Zaporizhia, Dnipro, Kriviy Rih, etc. In Kriviy Rih major share of the money paid as environmental tax currently does not go to city budget. For examples, starting from this year, the payments for CO2 emissions are included into national budget revenue of Ukraine and local budgets were deprived of this important source of income. They only partially get the charges from environmental tax for other types (sources) of pollution. This means, that city budget of Kriviy Rih will not get tax funds from our company needed for improvement of environmental conditions in the city in 2019 and in subsequent years, if there are no changes in tax legislation.
We see the only solution for this situation: environmental charges must remain local and be used according to their intended purpose where pollution of the atmosphere occurs, or other environmental damage is caused. Such an approach would be fully aligned with the course for decentralization and reinforcement of financial self-sufficiency of local communities. At the same time, this would improve targeted use of resources – they would be spent for environmental actions and would not be just collected to common budget. And if the companies, which pay environmental tax, get a right to use a part of mandatory environmental charges individually for environmental actions, then this will have a positive effect on life in those cities where such companies are located. Because only the company knows best what actions are to be taken in order to mitigate adverse environmental impact resulting from its activities.
In our opinion, the fairest and the most progressive system of environmental charges would be the model when half of it would go to local budgets and the second half would remain at disposals of companies-payers and would be spent solely for environmental actions. Fiscal authorities could track targeted spending of environmental tax by the companies and in case of violations (off-target spending) demand payment of penalties to the budget.
It is commonly known that our country, as a part of Association with the EU, has taken a number of commitments to change environmental legislation. In particular, regarding increase in tax burden. However, it is hardly that the commitments of Ukraine to European partners were aimed at mechanistic increase in payments. What is the purpose of environmental tax if it was transformed into solely fiscal tool to increase the revenues?
Draft laws No. No. 10146-1 and 10147-1 have been registered at Verkhovna Rada and they make provisions for efficient mechanisms to use the money of environmental tax. It would be beneficial for the country to amend Tax and Budget Codes in order to stimulate big companies to invest money into environmental programs. (AMKR/Ukrainian metal)