Winemakers and tobacco companies ask Kuchma to veto the law on raising the excise duty on wine and international cigarette brands.

Representatives of winemaking enterprises and tobacco companies decided to ask President Leonid Kuchma to apply the right of veto to the law "On Amending Certain Laws of Ukraine on Taxation Issues in Connection with the Adoption of the Law of Ukraine "On the State Budget for 2004" No. 4000-1. This was stated by representatives of winemaking and tobacco companies at a press conference. "To ask the President to apply the right of veto to this law," said Philip Morris company representative Kostiantyn Riabenko. According to representatives of tobacco companies, the law adopted on February 5 by the Verkhovna Rada provides for an increase in the excise tax on international licensed cigarette brands from 11.5 hryvnias/1000 pieces to 30 hryvnias/1000 pieces, which is discriminatory and contradicts the Constitution. "Discriminatory actions are not against individual brands, but against half the market," said JTI Ukraine company representative Dmytro Redko. In the opinion of tobacco companies, the entry into force of the law will negatively affect Ukraine's investment attractiveness, and will also not facilitate Ukraine's accession to the World Trade Organization, since many of its provisions contradict international agreements. In the opinion of wine producers, the entry into force of law 4000-1 will lead to a decrease in the production of semi-dry and sweet wines and will worsen the financial condition of subsidiary farms. "Market restrictions are being introduced," said Chornomorska Perlyna company representative Denys Fudashkin. "The law introduces an actual ban on the purchase of grapes from the population," he added. Law 4000-1 adopted by the Rada provides for an increase in the excise tax on semi-sweet and semi-dry wines from 0.25 hryvnias/liter to 0.92 hryvnias, introduces a quota on the production of alcohol for wine materials in the amount of 1.2 million decaliters, and introduces a ban on cash payment for grapes, fruits, and berries purchased for industrial processing. "A threefold increase in the excise tax is inconsistent," said Vyacheslav Ponomaryov, a representative of the Association of Winegrowers and Winemakers. Representatives of tobacco companies and winemaking enterprises expressed hope that Kuchma would make a balanced decision regarding law 4000-1. As the agency reported, on February 5 the Rada adopted the law "On Amending Certain Laws of Ukraine on Taxation Issues in Connection with the Adoption of the Law of Ukraine "On the State Budget for 2004" No. 4000-1. 296 deputies voted for the adoption of the law, with 226 required. The law provides for a reduction of the value-added tax rate from 20% to 17% starting January 1, 2005, and to 15% starting January 1, 2006. By the same law, the Rada restored value-added tax benefits, in particular restored VAT reimbursement for food exports, except for wheat, rye, and barley.

The same law regulates the issue of VAT payment on grain imports on the condition of a 180-day deferral of VAT through the issuance of promissory notes.