August 28, 22:01 PM. In the spring, Prime Minister Arseniy Yatsenyuk gave the newly appointed head of the State Fiscal Service, Roman Nasirov, three months to reform the agency, unequivocally stating there was no time to waste. He even threatened: if he fails, we will make appropriate personnel decisions. Three months passed, and the SFS remained quiet; even the employees of the central office on Lvivska Square failed to notice any signs of reform, let alone those in the regions. Meanwhile, even such a seemingly simple task as appointing new SFS leadership at the regional and district levels was not accomplished.
In the spring, Prime Minister Arseniy Yatsenyuk gave the newly appointed head of the State Fiscal Service, Roman Nasirov, three months to reform the agency, unequivocally stating that there was no time to waste.
He even threatened to make personnel decisions if he couldn't handle it. Three months passed, and the State Fiscal Service was in utter peace. Even the employees at the central office on Lvivska Square hadn't noticed any signs of reform, let alone the regions. Meanwhile, even such a seemingly simple task as appointing new SFS leadership at the regional and district levels hadn't been accomplished.
It's undeniable that no one expected tax reform to be implemented in 90 days. Nor were they particularly hopeful of Nasirov's dismissal, whose appointment was accompanied by a sham open competition, public interviews, and other labor-intensive efforts that would have to be deemed in vain. Nevertheless, there was hope that changes in the fiscal service's operations would at least begin. This was especially true given that, unlike his predecessor, Bilous, Nasirov isn't preoccupied with tax reform and could devote 100% of his energy and resources to reforming the agency itself. Maybe, but it won't happen.
90 days stretched into 500
However, in his initial speeches, Roman Nasirov did indeed talk about reform within 90 days, and by early July, he confidently stated that reforming the State Fiscal Service was impossible even in a year. Then, naturally, a reform plan was drawn up, and somehow, immediately, it transformed from a blitzkrieg into a sluggish bureaucratic exercise.
Such key events as the transfer of the State Fiscal Service to the Ministry of Finance, the alignment of the service's powers and competencies, and the expansion of the number of deputy heads of the agency from three to five were scheduled for the coming dates. More or less constructive measures, such as a review of the effectiveness of the management organization, were skillfully postponed until mid-2016. It has been repeatedly stated that an unrestructured fiscal service and its usual methods of operation would effectively ruin any tax reform. However, it is unrealistic to expect that the reformed structure will implement the Ministry of Finance's plans.
The clause on creating a program to reform the tax complaints system, which is supposed to be completed by June 30, 2016 (!), is the ultimate mockery. The tax authorities have allocated themselves at least a year just to create the reform program; it's scary to imagine how long it will take them to implement it.
"I personally haven't noticed any changes. The tax service operates the same way a year ago, with the same approaches, the same level of service, and the same unqualified staff," Leonid Rubanenko, president of the Union of Tax Consultants, told ZN.UA. "And the businesses we communicate with haven't noticed any changes, and aren't particularly hopeful. For there to be change, something needs to be done, and nothing's happening yet. There are rumors that the number of offices for major taxpayers will be increased, but for now, that's all we know about the tax reform."
The expected staff reductions, previously discussed by Nasirov's predecessor, Bilous, have also been shelved. So what? The structure employs 54 people, 3 of whom are in management. On the contrary, instead of staff reductions, the State Fiscal Service will create new structural units—an executive committee with its own secretariat, a special unit for managing structural changes, a departmental reform coordinator, and an advisory council to support the reform of the State Fiscal Service. Meanwhile, tax officials continue to talk about the miserable (and true) level of salaries, without which it's impossible to count on the integrity and impartiality of rank-and-file employees. However, the idea of increasing the salaries of the remaining employees by reducing staff and freeing up additional financial resources has been laid to rest. No, in public speeches, Nasirov sometimes talks about staff reductions and possible salary increases, but these, like many of his other statements, are not supported by documentation.
Apparently, taxpayers will once again be footing the bill for the hordes of consultants, advisors, and secretaries overseeing the reform. Moreover, the plan rarely includes clear criteria for selecting these reform coordinators, and there's no mention of open competition for these positions. This, of course, doesn't guarantee that the person appointed from above won't carry out orders from above—indeed, quite the contrary.
Ombudsmen can't spoil the porridge
The first sign of such reformist appointments has already been announced: Taras Kachka, a former vice president of the American Chamber of Commerce (the same chamber that serves on all working groups for all government projects), has been appointed as a fiscal business ombudsman. Now, it's important not to confuse Taras Kachka with Algidas Shemeta, who is simply a business ombudsman, not a fiscal ombudsman. Interestingly, according to a report by Shemeta's business ombudsman council, published in June of this year, the majority of complaints filed by entrepreneurs concern tax administration. Why, then, do we need another ombudsman? Especially since the functions of the fiscal protector of business interests overlap not only with those of Shemeta, but also with those of the long-standing and effective public council under the State Fiscal Service.
"The only difference is that the ombudsman was appointed by order of the head of the State Fiscal Service, without any competition, discussion, or recommendations from businesses. And he will make decisions unilaterally, not collectively, like a public council," Dmytro Alekseenko, head of the public council at the State Fiscal Service, explained the details to ZN.UA. "At a minimum, three facts about the newly appointed ombudsman should raise concerns: he was on the team investigating Bilous's activities, he was also on the team that selected Nasirov for the post of head of the State Fiscal Service, and most importantly, he works pro bono, meaning he is not subject to anti-corruption legislation." Mr. Alekseenko is confident that Taras Kachka, given his track record, will be oriented toward big business. However, judging by his active participation in the latest briefing by Deputy Finance Minister Olena Makeeva, where he literally played the devil's advocate, he is not oriented toward business at all. Accordingly, one shouldn't expect any revolutions from this appointment. In any case, unlike the newly appointed ombudsman, the public council plans to ask the fiscal service's leadership at its meeting on September 17th where the long-awaited reforms actually are.
A special interagency commission, which has been auditing the State Fiscal Service for the past month, also sought to identify changes in the tax authorities' work. The working group included specialists from the Presidential Administration, the Ministry of Finance, the Ministry of Economic Development, law enforcement agencies, and even the Financial Security Department of the National Institute for Strategic Studies.
The commission examined fascinating and perhaps never-before-studied aspects of the fiscal service's work. For example, it assessed the impact of the SFS's regulatory initiatives on the overall economy and its individual sectors, the accuracy and completeness of tax and fee forecasts, the availability of approved methodological frameworks for determining revenue projections, the impact of macroeconomic indicators and legislative changes on tax revenues, and the consistency of tax revenues with economic development trends.
The commission's findings and recommendations are currently in the final stages of preparation. According to the working group's members, they will be taken into account during the implementation of the upcoming tax reform and the reorganization of the State Fiscal Service. True, the tax reform is supposedly already completed and will be presented by the Ministry of Finance at the National Reform Council on September 3, while the tax service reform is unlikely to take place. However, let's hope that the results of this work will at least be made public and not suffer the same fate as the internal investigation conducted within the State Fiscal Service earlier this year.
How Konstantin Igorevich and Roman Mikhailovich Quarreled
No inspections by any commissions have prevented the alarming processes taking place within the State Fiscal Service itself. In June, Gennady Romanenko became Nasirov's advisor on a voluntary basis. During Viktor Yanukovych's presidency, he headed the Kyiv Interregional Customs Service. As the godfather of Ihor Kaletnik, who was wanted and headed the entire customs agency during Yanukovych's presidency, he began to bluntly promote the right people to leadership positions at regional customs offices. Specifically, Dmytro Yakobchuk, who served as deputy head of the Yagodin customs post, a key one in the system, in 2012–2013, was appointed acting head of the Volyn Customs Service. Incidentally, alongside Yakobchuk, Roman Mykytyuk, also a Kaletnik associate, was also considered for the same position. He had previously served as head of the Lviv, Rivne, and Vinnytsia customs offices at various times. In other words, they were choosing between two evils. They chose the lesser, by the way. But then events began to unfold that clearly demonstrated that the State Fiscal Service, of all people, was not up for reform.
On July 8, Konstantin Likarchuk, the current head of customs "outside the system," openly complained to the guarantor at a meeting between the president and the heads of regional administrations in Odesa that he was being prevented from clearing out personnel, and that the "reincarnation of Kaletnik" had already begun. Less than two weeks later, Mykola Salagor, head of Chernivtsi customs, complained to the media that Likarchuk had literally forced him to resign, and that the meeting took place on the terrace of the Fellini restaurant in Kyiv. Nasirov allegedly personally saved the situation by preventing the "restaurant-style" resignation.
After the story became public, Likarchuk gave several interviews to the press, but there he no longer seemed such a dedicated fighter for the truth, became confused in his testimony, blamed everything on others, and again noted that he was incapable of making decisions on personnel matters, which is why Kaletnik's people were on the offensive.
On August 12, Likarchuk was on his way to the Customs Forum in Rivne and was involved in a car accident. Everyone was safe and sound, but Roman Nasirov initiated an internal investigation into Likarchuk's departure for the forum without management permission and even raised the possibility of his dismissal. For his trip to Rivne. For the Customs Forum. When Nasirov finally realized the ridiculousness of the situation, he decided to hush up the dismissal and began to simply curtail Likarchuk's authority. Likarchuk began to publicly complain again.
And somewhere in the background, the Prosecutor General's Office was investigating the Center for Education Quality Assessment on suspicion of rigging external testing results for graduates, whose director is Kostiantyn Likarchuk's father. However, this process may not be connected to the infighting within the State Fiscal Service. But the facts of such active behind-the-scenes intrigue within the fiscal service are significant in themselves. ZN.UA has already speculated that Mr. Nasirov was appointed to his current position as a reliable executor of senior management's orders (there's no question of reforming the service), while Likarchuk, who is extremely removed from the customs department, was appointed as a front behind which schemes could be hatched. And, as we can see, Likarchuk is failing to fulfill his role, unlike Nasirov.
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One of the experts, a member of the aforementioned interdepartmental commission that analyzed the work of the State Fiscal Service, summarized their work very succinctly: "The State Fiscal Service is not reformable. It's impossible." This is precisely why all these delays in changes for a year or a year and a half are nothing more than a bureaucratic ruse to cover up the lack of any action. Given the rapid turnover of key agency leaders in Ukraine, any process that takes a year to implement is doomed to failure, because within that year, someone else could take the helm and start from scratch. Or maybe they won't, in which case these sluggish but far-reaching reform plans will provide Nasirov with another year and a half of quiet work, though hardly for the good of the Motherland. It's scary to think what will happen in those eighteen months, given everything that's happening in the tax service and the complete indifference of the rest of the power vertical to these processes.
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