The issue of investments has been painful for the Ukrainian economy for many years — and, accordingly, for the Ukrainian authorities as well. \n \n \nDespite the hackneyed slogans about the need to create a favorable investment climate, Ukraine has been and remains one of the outsiders among Eastern European countries in terms of attracting foreign capital into the national economy. In this situation, every real investment should elicit the most active interest from the Ukrainian authorities, including at the highest level. Especially if it is an investment in a promising sector. And, even more so, if it comes from a powerful investor from a developed and wealthy country. It is not surprising that on June 11, President Leonid Kuchma personally devoted considerable attention to a delegation from the Japanese company "Sumitomo Shoji." During the meeting, according to official reports, the president spoke specifically about the importance of investments for the Ukrainian economy in general and about the prospects of investment cooperation with Japan — in particular. "I would like Japanese capital to be more firmly present on the Ukrainian market," Kuchma stated during the meeting. A bit ornate, but entirely clear. And entirely logical: the Japanese company is quite solid, and it has already chosen as attractive spheres of the economy the agro-industrial complex, the tourism sector, transport, and the financial-banking sector — that is, quite promising branches of the national economy. \n \nUnfortunately, good intentions are one thing, and the peculiarities of national investing are something entirely different. Perhaps the polite Japanese would not have been so optimistic if they understood that the promises and declarations of Ukrainian officials are far from always translated into reality. \n \nAbout half a year ago, the same president of Ukraine, despite his love for Japanese capital, de facto prohibited the company "Isuzu Motors" from investing 290 million dollars in the Ukrainian economy. By a special decree, the head of state canceled the four-year investment program, although before that it had passed all possible checks and approvals in all bureaucratic bodies. The Japanese were quite perplexed. Much more vivid emotions were presumably felt by Ukrainians, who never received the long-awaited investment. The money was supposed to come to Volyn — specifically, to the Lutsk Automobile Plant. Incidentally, the automotive industry, despite all the difficulties, is hard to call unpromising in Ukraine. \n \nThe presidential decree greatly disappointed not only the LuAZ manufacturers, who had expected production volumes to rise to a billion hryvnias. According to the investment program, the creation of new capacities for the production of trucks and buses was envisaged on the basis of the plant. It is worth emphasizing — specifically for production, and not, say, for large-unit assembly. This meant the creation of new jobs in the electrical, chemical, and construction industries of the region as well, and consequently — also growth in budget contributions. As automotive builders assert, the creation of one job at such an enterprise causes the appearance of up to six new jobs in related industries. And in general, 290 million dollars is a serious sum for traditionally agrarian Volyn. On the scale of the oblast, according to LuAZ workers' calculations, it would have given an increase in industrial production of up to 4 billion hryvnias. All these figures, however, can now be used only in the conditional mood. \n \nBut the most interesting thing is not even the very fact of refusing the investment. It turns out that OJSC "Lutsk Automobile Plant" has already been under siege by the tax authorities for almost a year. In fact, a real war is being waged against the enterprise. There are, unfortunately, many similar examples in today's Ukraine, but for now something else will be discussed. Perhaps the president wisely reasoned that the tax authorities don't touch entrepreneurs for no reason, and it's better to wait with investments? Otherwise, who knows whether the expected benefit will come from them... The problem, however, is that precisely in connection with the reasons for the tax pressure on the enterprise, there are far too many ambiguities. \n \nThe main motive for the constant inspections conducted since September of last year is the enterprise's underpayment of taxes to the state budget, which allegedly took place. According to the State Tax Administration in the Volyn oblast, in the current year LuAZ paid the state only 200 thousand hryvnias, which is far less than due. That is why tax raids descended on the plant, regularly involving "landing forces" from other oblasts as well. Moreover, the process is directly controlled from Kyiv, which the tax officials themselves, in fact, do not hide. \n \nHowever, the enterprise insists that in the first quarter of the current year the plant paid not 200 thousand hryvnias to the budget and non-budgetary funds, but 2.5 million. The difference is substantial. In addition, according to the automotive builders, the tax officials deliberately keep silent about the fact that since 2000 the development of production capacities has allowed LuAZ to pay off previous losses in the amount of 14.6 million hryvnias, to make the plant profitable, and to begin paying that very profit tax, in the underpayment of which the plant is accused today. The most interesting thing is that the State Tax Administration of the Volyn oblast has already lost several court cases to the plant, having failed to prove the facts of tax evasion by LuAZ. Nevertheless, in their numerous official statements, the tax officials continue to confidently call the plant's management criminals. Although, of course, only a court can do that — which, in turn, cannot take place — because the valiant tax administration, having opened the corresponding criminal case in December 2003, was never able to find evidence of the suspects' guilt. \n \nAs they think at the plant itself, the situation is explained by the fact that the local tax administration is trying in some strange way to save "the honor of the uniform." Since the tax officials' statements, which are groundless in the opinion of the plant workers, strangely coincide in time with the STA of Ukraine's information about the underfulfillment of the budget revenue plan by 4 billion hryvnias. And so now all regional state tax administrations are trying, if not to rectify the situation with their usual police methods, then at least to imitate vigorous activity. \n \nAt the same time, it cannot be overlooked that the tactic of "stringing along" enterprises with constant tax inspections, which often leads to the shutdown of the enterprise or a significant reduction in its development pace, is often applied in Ukraine with a fully pragmatic purpose. Sometimes for political considerations, sometimes simply because the enterprise has "caught the fancy" of one of the powers that be, and they want to acquire it for a pittance after ruining it... \n \nBe that as it may, the inspections of the enterprise continue, as does the accusatory rhetoric directed at the plant. Which, in the latter's opinion, has far from the best effect on the situation of the oblast's budget-forming enterprise, which provides work for 1,100 residents of Lutsk and accounts for 35% of the city's GDP. The constant statements of the tax officials, the plant workers assert in an official joint statement by the labor collective, administration, and trade union committee of the OJSC, are aimed, in particular, at exerting pressure on the court, which has already overturned the tax administration's ruling on opening a criminal case against the plant's management. As a countermove, the LuAZ workers declare, they will have to appeal "to the appropriate bodies with a petition to open a criminal case against the officials of the tax administration in the Volyn oblast." However, even if such a case is opened (the probability of which is low), it is unlikely that the plant's ordeals will end there. \n \nEspecially given the position of the country's top officials, for whom the tax administration is by definition always right, and protecting its employees even from just accusations is a far more important matter than attracting those same investments into the domestic economy. What is surprising is only the readiness with which the country's leaders (including the president) share the generally accepted myths about the reasons for Ukraine's investment unattractiveness. Undoubtedly, both imperfect legislation and the same pre-election situation have a far from beneficial effect on this attractiveness. But, it seems, characteristic cases like the one described here have no relation to these matters... \n \n