Events

22 August, 21:37
The Verkhovna Rada Endorsed the Idea to Eradicate Corruption in Land Auction Law

On November 24, the Verkhovna Rada of Ukraine passed in principle Bill 2279 On Amendments to the Land Code of Ukraine Concerning Land Auctions in its first reading, the authors of which being the People’s Deputies of Ukraine: M. Kucher, O. Bakumenko, P. Yurchyshyn, V. Davydenko, L. Kozachenko, V. Lunchenko, O. Kulinich, S. Labaziuk, V. Ivchenko. The Ukrainian Agrarian Association also took part in its development.

It is significant that the people’s representatives could take a correct view of the relevance and importance of this Bill for agrarians and took a decision to review it in a shortened procedure.

The goal of the above-noted Bill is a significant reduction in corruption in the field of assignment for state-owned land use. Therefore, the Bill puts forward a mechanism by which land auction cost funding may be carried out by an organization conducting the auction and the specified costs shall be refunded to the organization by the auction winner. This will allow conducting such auctions regardless of the availability of budget funds for such events. As a consequence, land will not be abandoned but will be cultivated by farmers which will allow increasing the GDP, budget revenues and welfare of rural population.

In addition, the Bill will significantly reduce the number of cases when state-owned lands are transferred for use out-of-auction, for example, regarding the following cases of land plot transfer to:

  • state-owned and municipal enterprises, budget-funded institutions, higher education establishments, as well as commercial companies, the state or municipal share of stocks (shares, equity interest) in the authorized capital of which exceeds 60 percent. The exclusion of the specified provision is due to the fact that state-owned and municipal enterprises, budget-funded institutions, higher education establishments can receive land plots based on right of perpetual use (acquired without auction);
  • enterprises, institutions and civic organization in the field of arts and culture (including national artistic associations and their members) for artistic studios. This is due to the fact that if the transfer of land is made to maintain already existing studios, such land plots are transferred according to out-of-auction procedure. State-owned and municipal land to build new artistic studios shall be purchased at auctions according to regular procedure;
  • create green areas of public use. This clause is due to the fact that the term "green area of public use" is too broad providing opportunity for arbitrary interpretation. Land plots of state and municipal property necessary to build public parks, gardens, etc., are advisable to be let out for lease not to some kind of legal entities, but state-owned or municipal enterprises based on right of perpetual use;
  • citizens for farming, personal agricultural farming, gardening, construction, and maintenance of dwelling houses, commercial buildings and constructions (household plot), individual cottage construction, construction of standalone garages, for haying and grazing for cattle, and vegetable gardening. This clause arises from the fact that land plots for farming, personal agricultural farming, gardening, construction and maintenance of dwelling houses, commercial buildings and constructions (household plot), individual cottage construction, construction of standalone garages may be transferred to ownership to citizens on a free basis according to Article 121 of the Land Code of Ukraine. The ability to lease out the specified land without auctions leads to losses in local budgets and stimulates corruption. Opportunity to lease lands without holding auctions for haying, grazing for cattle and vegetable gardening is also taken into account in the Bill.
  • place infrastructure for wholesale markets of agricultural products. This is due to the fact that arranging wholesale markets of agricultural products is a profitable business, so granting benefits by the state for providing land for their location is unnecessary.

It is proposed to exclude the provision which, firstly, leads to imbalance of land legislation, and, secondly, allows the uncontrolled spread of practice of transfer of state-owned and municipal lands in a non-transparent way (more cases of transfer of land leased without holding land auctions in circumvention of the Land Code of Ukraine).

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