On Wednesday, July 21, the Round Table “Towards Ukraine’s Carbon Neutrality: Improving Approaches to Carbon Tax” was held. The discussion was initiated by East Europe Foundation and Zentrum Liberale Moderne (Berlin) within the framework of the Project “Ukraine in Europe: Parliamentary Dimension”, implemented with the financial support of the German Federal Foreign Ministry.

The Round Table was also co-organized by the Committee of the Verkhovna Rada of Ukraine on Finance, Taxation and Customs Policy and by the Committee of the Verkhovna Rada of Ukraine on Ukraine’s Integration into the European Union. The discussion was moderated by Oleksiy Ryabchyn, Adviser to the Naftogaz of Ukraine NJSC CEO on the Development of Low-Carbon Businesses and the EU Green Deal.

In her welcoming remarks Marieluise Beck, Director for East-Central and Eastern Europe of the Zentrum Liberale Moderne, stressed the importance of decarbonization policies to avoid devastating climate change. Victor Liakh, President of East Europe Foundation, stressed that these issues concern each of us. Therefore, it is especially important that all stakeholders were involved in the Round Table – from government officials and MPs to representatives of science and business.

The following issues were discussed:

  • How does the carbon pricing system work in the EU, in particular in Germany?
  • How can Ukraine’s carbon tax be reformed?
  • What is the position of different stakeholders in business and politics?

The main speakers of the Round Table were:

  • Carolin Schenuit (Managing Director, Forum Ökologisch-Soziale Marktwirtschaft (FÖS), who spoke in detail about the German experience in this field; and
  • Nadiya Novytska (PhD in Economics, Head of the Excise Taxation Research Department of the Research Institute of Fiscal Policy of the University of the State Fiscal Service of Ukraine), who presented the study “Ways to Improve Ukraine’s Carbon Tax”.

MP Nina Yuzhanina stressed that the goal should not be to increase taxes, but to reduce emissions. Therefore, the problem must be addressed comprehensively (1. correct calculation (accounting) of emissions; 2. state fossil fuels program; 3. clear strategy for renewable energy sources). Nina Yuzhanina stressed that the lack of targeted use of the funds undermined the confidence of taxpayers. Therefore, it is important to use these funds to protect the environment.

The Government’s position was presented by Iryna Stavchuk, Deputy Minister of Environmental Protection and Natural Resources of Ukraine. She stressed that in the context of decarbonization, conditions should be created in which it would be more expensive to pay for emissions than to implement modernization. She also spoke about the concept of creating a Climate Fund.

Serhiy Maslichenko, Climate Finance Adviser to the Deputy Prime Minister for European and Euro-Atlantic Integration, former Deputy Minister of Energy and Environment in Ukraine, said that the success of climate policy depended on acceptability, and all stakeholders should clearly understand how funds were spent from the relevant taxes.

Oleksandr Shumsky, Head of the Department for Administration of Resource Payments, Rent and Local Taxes and Fees of Legal Entities of the Department of Tax Administration of the State Tax Service of Ukraine, stressed that the main issue was not to increase the tax rate, but to improve its administration. Currently, according to his estimates, we lose up to 60% of revenues, and the development of better approaches to administration (with the current tax) will increase revenues from the environmental tax by 2,5 times.

The vision of the business was presented by Olga Boiko, Coordinator of the Committee for Industrial Ecology and Sustainable Development of the European Business Association. She stressed that three components of raising taxes were important for business: predictability, gradual changes and targeted use for combatting climate change. She also noted that energy (environmental) taxes and the emissions trading system could coexist.

Tamara Burenko, Head of the Department of Low Carbon Development of the State Agency for Energy Efficiency, called not to confuse decarbonization with environmental protection, and energy efficiency with energy conservation. Taxes only contribute to energy saving, and energy efficiency needs to be further promoted. Tamara Burenko also drew attention to the preservation of the “polluter pays” principle.

Oleksandr Dyachuk, Leading Researcher at the Institute of Economics and Forecasting of the National Academy of Sciences of Ukraine, drew attention to the principle of fairness: the main tax burden should not be shifted to the population, and large industrial producers and agricultural holdings should not avoid taxation.

Summing up the Round Table, Marieluise Beck noted that such professional discussions proved once again: Ukraine does not want to become part of Europe, Ukraine already is.

The discussion was held within the Project “Ukraine in Europe: Parliamentary Dimension”, implemented by East Europe Foundation in partnership with Zentrum Liberale Moderne, with the financial support of the German Federal Foreign Ministry