11:54 30.03.2021

Tax amnesties often hurt tax collection in long run – IMF Resident Rep in Ukraine

2 min read
Tax amnesties often hurt tax collection in long run – IMF Resident Rep in Ukraine

The International Monetary Fund (IMF) is skeptical about tax amnesties in general, since they hurt tax collection in the long run, IMF Resident Representative in Ukraine Goesta Ljungman has told Interfax-Ukraine.

"While preferential tax rates for specific groups of taxpayers will obviously be welcomed with open arms by those who see their taxes go down as a result, this does not necessarily make it good policy. We are skeptical about tax amnesties in general," Ljungman said.

"Tax amnesties often hurt tax collection in the long run because they discourage people from paying their future taxes by making them think there will be yet another future amnesty," he said.

The IMF Resident Representative in Ukraine said a key objective of the IMF is to re-establish a fiscally sustainable position, which will require spending restraint and maintaining government revenue.

"But if there is a tax amnesty, public officials and their close relatives and associates should not be allowed to participate. It is also absolutely crucial that the amnesty is not allowed to be used as a vehicle to launder proceeds from crime and corruption, and that it is not abused to grant amnesty from criminal activity," Ljungman said.

As reported, President Volodymyr Zelensky registered in parliament a package of bills on tax amnesty (bills No. 5153-5156).

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