Tax and accounting insights for Ukraine
03.03.24
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Who is a "national producer" and should we help them?

Such phrases as "made in Ukraine", "import substitution", "buy Ukrainian", "localization" seem very correct and timely, because we are talking about the development of our economy. And this is what we see. But what do we not see?

These slogans hide the interference in the economy by officials who restrict, prohibit, regulate, impose duties and taxes, provide subsidies and preferences.

Everyone suffers because of this, including Ukrainian producers. But most people don't understand this, so it's important to explain and communicate this idea to the masses. Therefore:

1. First, we need to define who a domestic producer is. Is a company that packs Ceylon tea in Finnish packaging in Kyiv a domestic producer? Is a company that bolts wheels to a car an auto manufacturer? Or maybe it's McDonald's, which makes burgers and fries? What about other restaurants? What about builders, agricultural producers, IT companies? After all, are Nova Poshta, Rozetka, ATB national producers?

And what about an employee who creates a service for an employer, is he a national producer? Is a hairdresser, a doctor, a plumber, and finally, a soldier who creates security services and protects us today a national producer?

It turns out that everyone who creates, produces goods and services in Ukraine is a Ukrainian producer! If you think so, then I agree to support every Ukrainian manufacturer! That is, everyone! But why help everyone? Perhaps it would be easier to just not interfere with them.

2. We still need to define what the concept of "national producer" is, or even simpler - does anyone have products of 100% Ukrainian origin? Anyone who has read Leonard Reed's essay "I am a Pencil" (if you haven't, hurry up, it's only 5 pages) knows that it is impossible to create a pencil without cooperation with the whole world! Our planet is a giant factory, an international division of labor where billions of people cooperate with each other. Although they do not know about each other.

There is no such thing as a "national producer" in its pure form! It is impossible to create an airplane, computer, or pencil without using imported components, equipment, materials, and services.

3. Ever since the days of the classical economists Smith and Ricardo, it has been clearly understood that international trade, exchange, and division of labor contribute to the development of living standards in all countries of the world. That trade between a developed and a developing country makes people in both countries richer. If foreigners produce a certain type of product more efficiently, then we should not fight against them, we should use it, buy it, and produce what we do better. There is no import without export and vice versa. To buy something abroad, you first need to sell something there. So imports are a great good, despite the fact that people are so afraid of them.

We have to use the global factory, buy and sell, we have to become a part of the global economy, not destroy it and restrict trade, as our European neighbors are doing today.

We need to be smarter.

Volodymyr Popereshniuk, Ukrainian entrepreneur, co-founder of Nova Poshta

Buhgalter 911 notes that the content of the author's materials may not coincide with the policy and opinion of the editorial team. The authors of the published materials include not only representatives of the editorial team.

The information presented in a particular publication reflects the position of the author. The editorial team does not interfere with the author's materials, does not edit the texts, and is therefore not responsible for their content.

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