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How to resolve the "Euro-car plates" issue in Ukraine

Author : Mykhailo Pozhyvanov

Ukrainians are familiar with an unjust price for customs clearance of a car. This problem might be eliminated just before the elections
14:53, 26 June 2018

Read the original text at 112.ua.  

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The issue of the "Euro-car plates" has deeper roots than meets the eye. Average Ukrainian is familiar with an unjust price for customs clearance of a car. But this problem might be eliminated just before the elections. This is only one layer, whereas there are two other ones. One of them rests on the question of why the average Ukrainian prefers foreign cars. In other words, where are the products of the domestic automotive industry? And, finally, the last component of the problem: why, in fact, the average Ukrainian generally prefers cars and not municipal transport?

An integrated approach is needed to solve the issue with the "Euro-car plates." We should understand that the power cannot take into consideration all three aspects at once. So let us start with the simplest point. That is with customs clearance.

Related: The law on Euro-plates: The rules of the game

Before May 16, 2008, that is, before Ukraine has joined the WTO, import of cars older than 8 years was banned. The reason was the government's concern for the environment. After Ukraine's accession to the WTO, this ban was abolished, but the new fees made the import completely unprofitable. Later, there were some restrictions on the import of cars that do not meet Euro-3 - Euro-5 standards. At the same time, thousands of Soviet-made vehicles were used, the ecological norms of which do not hold water, but this was not taken into account.

Preferences for old, but "local" cars are de facto preserved, but there are special excises for importing used cars from abroad. At the same time, the rate of excise duty depends on the volume of the engine and on the year of issue. In order not to pay a lot of money for customs clearance, owners of the foreign cars try to register a car for a foreigner, and they themselves drive by proxy. However, this is only one of the possible options for how to circumvent the law. Significant amounts of money do not get into the budget. They go into the pocket of that "foreigner" instead of being paid as a tax (provided an adequate price for customs clearance and inspection).

Related: Lithuania investigates legality of import of cars with European license plates to Ukraine

This situation echoes the history of collecting strawberries in Poland (labor migration, – ed.). This year the Polish strawberries might rot in the fields, rented by the Ukrainian farmers. The reason is greed. Tenants do not want to pay their own compatriots as much as the Poles paid them, and therefore the labor migrants are not interested in such seasonal work-outs.

But let us go back to our "Euro-car plates." The state should decide what is more important: keeping the current excise rates or helping the drivers? Obviously, the choice was made in favor of the latter - the bills from Nina Yuzhanina, submitted to the Verkhovna Rada for consideration last week, allegedly certify the desire to "tolerate" the "Euro-car plates." The state is ready to lower the price for customs clearance, but at the same time, it introduces a system of very strict penalties (including confiscation of the vehicle).

Secondly, the owners of imported cars are dissatisfied with the new strict rules of the game and the figures voiced by Yuzhanina. However, this is not the main thing here. Verkhovna Rada has not considered the bills with regard to the "Euro-car plates," which means that the situation with non-cleared cars that have filled the Ukrainian market will maintain the status quo. Although, I think that this issue will be solved closer to the spring of 2019. But this is a “holes patching” strategy, which does not level out the absence of our own cars.

Related: Police should have right to control cars with foreign registration

Meanwhile, auto production is a fairly powerful indicator of the industrial development of the state. More than 9 million people are employed in the world production of cars and their components, and taking into account the indirect jobs, the automotive industry has more than 50 million employees. At the same time, automotive industry uses the products of many other industries that produce metal, polymers, textiles, software and so on. Ukraine’s situation with the development of the automotive industry is really deplorable.

According to the data provided by zn.ua, only seven out of 12 car assembly plants in Ukraine operate, and the capacity is only 2%. In this case, the most powerful enterprise of the domestic car industry, ZAZ, has produced less than 2 thousand vehicles last year. With the situation that has developed, the share of domestic production in the domestic market is 11%, and this is 4.5 times less than a decade ago. Even in 2015, this figure exceeded 17%.

In terms of the absence of national product, Ukrainians continue using a “smuggled second-hand,” which costs Ukraine 2.6 billion dollars in 2017. This money could remain in the state treasury if the domestic car industry offered some alternative. But there is no alternative, as there is no automobile industry. This means that the invasion of "Euro-car plates" will not stop, and people will not actually care which excise rates will be used by the state.

Related: Sales of new cars in Ukraine climbs by 40.6% in January – AUTO-Consulting

Do Ukrainian officials think about what it means to have a car in Ukraine today? This is not a luxurious product, but a means of transportation. If the large cities of Ukraine had a normally developed municipal transport, would the problem of purchasing a car be so acute?

Recently, Earth & World ranked the 25 most clean cities in the world. In every case, they have pointed to a well-developed urban transport as an indicator of the level of environmental protection. It was noted that the winner of the competition - Hamburg - has a good regular tradition of "Sunday without a car". No one prohibits residents to use the car on this day, however, this is not necessary, because the travel on all types of public transport is free.

Kyiv (and other cities of Ukraine) can only dream of it. And this means that the situation would not change for many years, if not for decades. The only real correction might be a probable reduction in the excise tax on the imported cars. Although, as we understand it, this is just an imitation of real changes.

Related: Cars with Ukrainian plates to be fined in Crimea starting April 1

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

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