The reforms are crucial, says Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy.
The Ukrainian government recently presented the idea of reforming the State Customs Service by modernizing several checkpoints. It is supposed to make customs more effective and remove corruption, and Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, says that reforms will be implemented by the end of this year.
“At present, the issue of smuggling and the shadow economy is a direct threat to national security, so it was considered at the level of the National Security and Defense Council level. Undoubtedly, the decisions made by the National Security and Defense Council are not a tool to combat smuggling. We must be honest with ourselves – for a year and a half of fighting smuggling, we as a government have nothing to be proud of,” Hetmantsev said in an extensive interview with the Ukrainian news site Ukrinform.
To combat corruption and reform State Customs Service, there is a need for much more than just modernization of building and processes, Hetmantsev said. He said that the “problem is too complex and its solution requires extraordinary solutions and enormous efforts. In a country at war, tax evasion is a crime of special public danger.”
“The process of customs reform in our country is like a revolution that has a beginning but has no end (laughs). Let’s be honest; this process has dragged on… By the end of this year, we must complete the reform, have a renewed customs,” he said.
Lots of plans for modernizing customs
Hetmantsev said that he wants State Customs Service to do more to stop smugglers. It is, however, not the only focus of the current reform work. 9.8 billion UAH will be spent on several modernization projects, according to the government. 4.5 billion will go to construction, reconstruction, and overhaul of customs checkpoints, while 5.3 billion will be spent installing video surveillance, weighing, and scanning systems. A large chunk of the money comes as a loan from Poland.
“The main goal of the Ministry of Finance remains the same – it is a modern and transparent customs. The government’s decision today will allow Ukraine to obtain another 35 checkpoints with the latest technical equipment, which minimizes the human factor in the inspection, and hence corruption risks,” said Yuriy Draganchuk, Deputy Finance Minister for European Integration, adding that it would be used on customs points near Poland.
“The primary need for the construction of checkpoints is their technical re-equipment to automate the processes of customs control and clearance, which, accordingly, will speed up the necessary customs procedures, promote foreign economic activity and fill the state budget,” said Draganchuk.
Hard to change things
In the last few years, Ukraine has had several leaders of State Customs Service, the state agency overseeing Customs. In 2019, for example, Ukraine appointed Maksym Nefyodov to the position after the election of Volodymyr Zelensky to the presidency. Nefyodov is known as a reformer and is well-liked in the West for his views on modernization.
He lost his job in 2020 when Zelensky removed many ministers and state agency heads. Nefyodov estimated that “state coffers lose between $4 billion and $8 billion due to corruption” in the customs sector every year before leaving office.
After Nefyodov lost his job, he told the author of this article that he was pressured out of office because his reforms were too radical for some. He said that corruption in Customs is so widely spread that it requires several initiatives to better.
