The Draft Law No. 12188 “On Mining Waste Management” contains 5 controversial points that may have a significant negative impact on the Ukrainian economy.
This was stated by experts of the European Business Association.
They see 5 problems with the adoption of this draft law in the current version, which was considered and agreed upon at a meeting of the Verkhovna Rada Committee on Environmental Policy and Nature Management on December 4.
1. Increasing the fiscal burden on the same object of taxation.
The EBA said that if the draft law is adopted in the current version, in early 2025, after 6 years (i.e., until 2031), business entities will pay a tax on waste disposal for all volumes of waste from the extractive industry and for facilities for such waste.
In their opinion, this will certainly lead to:
- increase in the cost of production and its price;
- increase in the cost of final products;
- production downtime or even its closure due to unprofitability.
This, in turn, will cause:
- raising prices for the population, in particular for communal services (natural gas);
- potential decrease in revenues to the budgets due to a drop in production, etc.
The Association separately noted that in the text of the draft law published for public discussion, there was a provision that the relevant provisions enter into force after amendments to the Tax Code of Ukraine (PKU) regarding the abolition of the waste disposal tax.
"This norm was supported by the business community as a positive signal for a balanced and thought-out policy of supporting the national producer. Thus, we propose to return to the old version and to supplement the final and transitional provisions of the text of the draft law with provisions on the entry into force of the norms on financial support after making changes to the PKU in the part of canceling the environmental tax for waste from the extractive industry", – says the EBA.
2. Increased bureaucracy due to duplication of reporting.
Experts said that lawmakers propose to oblige operators to submit notifications of the transfer of extractive industry waste in draft Law No. 12180. At the same time, according to the current legislation, the waste declaration already submitted by operators indicates both the volume of transfer and the entity to which the waste is transferred. Therefore, the EBA considers it appropriate to remove this item.
3. Inconsistency of the amount of sanctions with the essence of the violation of the draft law.
According to experts, the draft law No. 12188 proposes to use the amount of the monthly minimum wage established by law at the time of the fine instead of the traditional tax-free minimum income to calculate the amount of the fine.
They noted that such an approach does not provide any reasonable justification for fines of UAH 160-480 thousand for each violation, which may include, for example, late submission of a report.
"In addition, according to p. 5 of the same article, for a repeated offense within a year after the first imposition of the fine, the amount of the fine is to be doubled, i.e. in the amount of 320-960 thousand. UAH", the EBA says.
4. The proposed version of the draft law does not fully take into account the specifics of waste management in the field of oil and gas extraction.The remark of specialists arose because the text of the draft law does not reveal or ambiguously interprets the concepts of "sludge barn" and "neutralization". According to them, this automatically leads to the use by oil and gas producers of a single storage-free drilling method, in which it is necessary to transfer the received waste to a specialized facility for further treatment, processing and disposal.
"In Ukraine, wells for oil and gas are drilled in significant volumes, but there are no specialized institutions and landfills in sufficient quantity for the transfer of non-hazardous waste," the Association says.
This circumstance can also lead to an increase in the cost of oil and gas production and an increase in prices for the population.
5. Duplication of mandatory stages of issuing/re-issuing a permit for a facility for mining waste.
Experts said that Draft Law No. 12188 provides for transboundary consultations in cases stipulated by international treaties of Ukraine. However, in their opinion, this will duplicate the implementation of a transboundary environmental impact assessment when conducting an environmental impact assessment and forming an EIA conclusion. Therefore, the EBA considers it advisable to exclude such provisions from the draft law or to provide for the possibility of taking into account a previously conducted transboundary environmental impact assessment in the procedure for issuing a permit for a waste facility.
Given the above problems, the EBA appealed to the Environmental Committee with a request to finalize the draft law taking into account the proposals of the business.
As EcoPolitic reported earlier, on December 4, the Committee on Environmental Policy and Nature Management recommended that the Verkhovna Rada of Ukraine adopt the government's draft law No. 12180 “On Mining Waste Management” as a basis.
