Kyiv Mayor Vitali Klitschko’s 2015 budget proposal with the Hr 1.9 billion surplus is already being criticized for its non-transparency. Moreover, with as much as Hr 8.2 billion -- or $512 million, or nearly half the spending -- coming from the state budget, Kyiv's city budget remains heavily subsidized at the national level.
The document released on Jan. 20 outlines Hr 22.1 billion of revenue — or roughly $1.4 billion — and Hr 20.2 billion of spending. Individual income tax is the major source of the money – it is expected to provide 30 percent of the cash flow going to the city budget, or Hr 6.6 billion. Kyiv keeps only 40 percent of this tax in its coffers.
Collection of the corporate income tax, most of which is also transferred to the state budget, will allow city to earn Hr 2.12 billion.
“I can’t say that we are satisfied with this budget. We will not have enough money in a lot of directions,” said Klitschko, according to Interfax-Ukraine news agency. He added that the City Hall is in ongoing negotiations with the Cabinet of Ministers regarding the budget.
Back in August, the mayor promised to put an end to the shadow schemes of the previous government and estimated Kyiv’s annual corruption-related losses at Hr 50 billion.
Ivan Sikorsky, director of the Open Society Foundation, a think tank in Kyiv, said the budget is far from perfect. “This is the old song of the predecessors,” he commented.
Both previous mayors of Kyiv, Leonid Chernovetsky and Oleksandr Popov, were widely criticized. While Chernovetsky was a populist whose rule was known for distributing land to non-transparent firms, Popov was a member of former President Viktor Yanukovych’s Party of Regions involved in violent dispersals of the EuroMaidan Revolution protesters who ultimately forced Yanukovych out of power on Feb. 22.
Sikorsky notes that the main problems stem from not dealing with the shadow economy, while Chernovetsky’s 2025 Kyiv plan is still being implemented. “The hit on corruption that Klitschko promised did not happen.”
Viktor Hleba, an urban development expert and advocate against illegal construction, said that all of his proposals were ignored. “All the budget is written out of the air,” he emphasized.
Hleba went on criticizing Klitschko’s team for not adequately addressing the parking situation in the city. The parking business generates only Hr 30 million in revenues for the city budget, though the figure could be much more. Sikorsky of the Open Society Foundation added that about 90 percent of Kyiv’s parking spaces are part of a shadow market adds up to about Hr 300 million.
Corruption matters a lot for the investors considering placing money in Kyiv projects, explained Serhiy Piontkovsky, a legal expert from the Baker & McKenzie, a law firm. This is especially sensitive for the real estate projects.
“Ultimately, corruption hinders significant real estate projects making them expensive and unattractive for reputable investors.”
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
