OREANDA-NEWS. July 02, 2012. The raise of VAT on sugar and agricultural products will result in bankruptcy of beet-growing farms and crash of the sugar beet branch of Moldova, - the Association of Sugar Beet Producers. This is stated in an open appeal of the Association to express the profound concern on the raise of the sugar and agricultural products VAT rate from 8% to 20% in line with the fiscal policy approved by the government.

ASBP states the respective resolution was adopted without any preliminary discussion with agribusinessmen and other concerned entities. The government also disregarded the resolution by the Council on the product line “Sugar Beet, Sugar and their derivatives” dated on June,6 as well as arguments repeatedly weighed in with by the Association during past years when the government was discussing a possible raise of the sugar VAT. ASBP considers this resolution the hastily arranged and calls on the Parliament and the President to prevent pernicious consequences leading sugar beet growers to insolvency and the sugar beet branch of Moldova to the collapse.

According to the Association, the raise of VAT of sugar to 20% will trigger uncontrolled growth of sugar and agricultural products smuggling from the territory of Ukraine through Transdniestria: our country can not combat against that and the sugar made in Moldova can not compete with the contraband. Furthermore, the VAT recovery offered by the government has the high corruption potential as far as growers will become hostages to fiscal inspections and corrupted officials in charge of subsidies distribution.

Besides, the VAT recovery leads to decpaitalization of agricultural enterprises. Referring to calculations by experts ASBP states that the state budget will gain nothing from the VAT raise. On the contrary, it will be at risk of huge losses because within the next 2-to3 years some sugar milling factories will rather curtail production of the beet sugar.

Lots agricultural enterprises will fail and thousands people living in the northern region of Moldova will lose their jobs. The Association of Sugar Beet Producers announced its intention to hold the protest march and to lead a column of specialized agricultural machines from the north of Moldova to its capital, which “may convince the Parliament and the President in a necessity to stop the fatal for sugar beet growing branch scenario.