Ukraine Government Plans Tax Cuts

KIEV, Ukraine -- Ukraine's new government will cut taxes, restore import tariffs and improve ties with Russia to raise economic growth rates into double digits, its finance minister said Monday.

Mykola Azarov, who was also named last week as first deputy premier in Viktor Yanukovich's government, called on the central bank to support growth by pursuing a competitive exchange rate policy.

"The new government will start in 2007 to prepare a new tax reform," Azarov said during an interview published on the Web site of his political party, the Party of Regions. "I think 2008 will be the year for a real tax reduction.

"We will create the best possible conditions for investment and business," he added. "We plan to achieve annual growth in gross domestic product of at least 10-15 percent."

Azarov served in Yanukovich's 2002- 04 administration, when Ukraine's economy posted growth rates of up to 12 percent, driven by booming exports of products like steel and chemicals. Exports account for about 60 percent of Ukraine's gross domestic product.

Growth slumped after the 2004 "Orange Revolution" which ousted Yanukovich, whose support base is in Ukraine's Russian-speaking east, and propelled the pro-Western Viktor Yushchenko to the presidency.

Azarov confirmed plans to cut the tax on corporate profits to 20 percent from 25 percent and the value-added tax to 18 percent from 20 percent.

The new team also plans to reverse decisions by the previous government to cut import tariffs, reinstating some, Azarov said. He did not give details.

Russia raises growth outlook

The Russian Ministry of Economic Development and Trade has raised its forecast for economic growth in 2006 to 6.6 percent from the previous estimate of 6.1 percent, AFX reported from Moscow.

The ministry's most recent official forecast was made in June. Government officials, including German Gref, the economic development and trade minister, have hinted in recent weeks that the forecast would be revised upward.

Russian economic growth is being driven by rising oil and natural gas exports amid record-high energy prices.

Source: Reuters