“White Business Club”, “National Cashback”, “Winter eSupport”: real support of the population or populism

The presidential initiatives “National Cashback”, “White Business Club” and “Winter is Support” were conceived as a lifeline for Ukrainian business and the population, designed to boost the economy and increase demand for domestic goods. However, instead of a triumph, these programs have come under fire: experts and the public are wondering whether they really work for the good of the economy or just create the illusion of help. The most proactive fellow citizens are collecting signatures for petitions demanding that the government stop the implementation of these, in their opinion, populist initiatives.

“Zelensky’s thousand”: effective support or an economic dilemma?

The news of the front columns recently became the payment of the so-called “thousands of Zelenskyi”, which provides financial support to every Ukrainian in the winter. During the crisis, the “Winter is Support” program was conceived as an emergency aid for citizens. Funds will be credited to the “National Cashback” virtual card issued through the “Action” application. At first glance, this is a laudable protectionist measure that demonstrates the government’s concern for the population, which has already tightened its belts because of the war.

After another autumn total increase in the price of food and basic necessities for many of our compatriots, this thousand could help patch a small hole in the family budget, partially covering the costs of “communal services”, medicine or other basic needs.

The program provides for the possibility of purchasing goods and services of specific categories, which directs money into the economy, stimulating consumption. This creates additional demand for the services of small and medium-sized businesses, which are not easy to stay afloat during the war. The fact that payments are made through Diya is designed to integrate citizens into the digital economy and stimulate the transition to cashless payments.

However, the financing of this initiative is criticized, because the program should be financed from the account reduction of expenses to other state business support programs. Society fears that the initiative will become another transfer of funds from one pocket to another.

Some complain about the payment of this assistance to all applicants, regardless of their financial situation. This means that even those who do not need it receive help, while vulnerable categories could receive more significant support. This calls into question the effectiveness of the use of budget resources.

In addition, the digital format of the program became an obstacle for many. Making payments through Diya has made access to money difficult for the elderly, those who do not have a smartphone or live in areas with poor internet connection.

Equally important is the risk of fiscal inflation or inflationary pressure due to government spending. This situation occurs when an increase in government spending (in particular, financing of social programs) creates additional demand in the economy that exceeds the supply of goods and services. Mass payouts combined with money supply growth can cause further increases in the prices of goods and services, effectively canceling out the positive effect of the amount received.

In order for the program to become more effective, it should be made more targeted, directing assistance to socially vulnerable segments of the population: pensioners, low-income and internally displaced persons. This approach will provide a much greater social effect at lower costs.

In addition, it is necessary to make the process of receiving payments more accessible. For example, the introduction of alternative mechanisms through banks or post offices would allow a wider range of citizens to be involved. And, of course, transparency of funding is important for maintaining public trust.

From the very beginning, the “Winter is Support” program had a noble goal – to help Ukrainians in difficult times and support the domestic economy by stimulating consumption. However, without targeting, transparency and ease of implementation, the initiative risks slipping into the realm of populism. Obviously, it should be refined in order to turn it from a burden on the budget into an instrument of social support.

“National cashback”: bonuses today, problems tomorrow

As you know, implemented this year “National cashback” provides for the return to consumers of 10th of the cost of purchased goods of domestic production to a special bank card. The declared goal of the program is to stimulate the consumption of domestic products and support national producers in the current difficult economic conditions.

At first glance, the program is very attractive, but in its essence it is much more complicated and ambiguous than it seems. One of the key advantages of the initiative is the stimulation of the purchase of Ukrainian goods. The hope of receiving cashback – a “tenth” of the money spent – can encourage consumers to choose products of domestic production, thus supporting local brands. According to the logic of the developers of the program, this will help increase the competitiveness of Ukrainian companies in the domestic market. The move is in line with current global economic trends, with the US and Eurozone countries also taking steps to support their domestic producers.

The program is designed to increase the volume of legal sales. Program participants must register their purchases, which automatically includes them in the legal circulation system. This not only increases revenues to the state budget through taxes, but also reduces the volume of the shadow market.

The social aspect of the program is also worthy of attention. For many of our compatriots, cashback can be a significant financial support that stimulates consumption and increases their solvency. In addition, the program promotes the popularization of cashless payments, which is important in the context of financial inclusion in Ukraine.

However, despite significant advantages, the program is not without serious drawbacks. As in the case of “Zelensky’s thousand”, one of the biggest complaints about the project is its populist character. Critics point out that the “National Cashback” is more of a political gesture than a tool for real economic growth. What at first glance seems like an absolute boon can become a serious obstacle in the long run. The economic effect of such an initiative may turn out to be insignificant or even negative in the long term.

Another problem is the discrimination of individual manufacturers. Since the program is aimed exclusively at supporting Ukrainian goods, it can reduce the level of competition in the market and create unequal conditions for foreign manufacturers also working in Ukraine.

An additional stumbling block is administration costs. The implementation of the program requires significant financial resources for the creation of technical infrastructure, monitoring and verification of transactions, which can additionally burden the state budget.

The risk of corruption also remains significant. The use of cashback can create opportunities for abuse, such as fraudulent transactions or manipulation of purchase data.

The program loses its effectiveness in crisis conditions. In the context of wartime, the population has low purchasing power, and cashback may not fulfill its purpose of stimulating consumption. In addition, this initiative actually turns into a hidden support for individual businesses, which raises questions about its fairness.

To optimize the program, it is worth expanding its audience through more inclusive mechanisms to reach wider segments of the population. It is also worth more strictly monitoring its implementation to prevent abuse and corruption risks.

Probably, the integration of “National Cashback” with other business support measures could increase its effectiveness. Among other things, the program can be supplemented with initiatives aimed at improving the business climate or reducing the tax burden for small and medium-sized businesses.

A tree is known by its fruits: it is important to conduct an independent evaluation of the economic impact of the program. This will help identify real results and avoid repeating mistakes in the future.

“White business club”: balance between support and challenges

program “Club of white business” was introduced with the ambitious goal of supporting enterprises that faithfully comply with tax legislation, creating more favorable business conditions for them. At first glance, the initiative looks progressive, but its implementation, as in both previous cases, causes a lot of discussion.

One of the key advantages programs have a moratorium on checks. Participants are exempted from scheduled document checks, which significantly reduces administrative pressure. This is especially important in times of economic upheaval, because businesses need space to operate stably.

Another important bonus is the shortening of tax administration terms. For the participants of the program, faster consideration of documents and provision of consultations is provided, which facilitates interaction with tax authorities. Special attention is drawn to the introduction of a compliance manager, who accompanies program participants, promptly resolving issues.

In addition, the program provides enterprises with the opportunity to reserve up to 25% of employees from mobilization. In wartime, this advantage becomes critical to retaining key employees and maintaining business continuity.

And there are spots in the sun: this program also has its weaknesses. First of all, this is discrimination. High criteria for participation – for example, a certain level of tax payment or salary – automatically excludes a large part of small and medium-sized businesses. This creates an uneven playing field and can widen the gap between corporations and small businesses.

Another challenge is the risk of abuse. The lack of transparent mechanisms to control the selection of participants can lead to manipulation. Yes, there are concerns that certain businesses may receive preferences through connections rather than honest compliance with the criteria.

In addition, the benefits of the program are limited during the period of martial law. That is, all the opportunities provided are short-term and do not guarantee a sustainable improvement of the business environment after the end of the war.

In order to turn the “White Business Club” into an effective development tool, it is worth reviewing its criteria. Expanding access to small business participation will allow more businesses to take advantage. A transparent mechanism for the selection of participants is also needed, which will eliminate corruption risks.

In addition, the program can be more effective if it is integrated with other business support initiatives – tax holidays or grant programs. This will create an integrated system that will stimulate economic growth.

Despite the declared goal of supporting Ukrainian business, such programs often face implementation problems and may have a limited impact on the economy. Critics point out that such initiatives can be populist and do not always bring expected benefits to taxpayers.

Instead of implementing such programs, experts suggest focusing on creating a favorable business climate, reducing bureaucratic barriers, fighting corruption and ensuring equal conditions for all entrepreneurs. This can contribute to the sustainable development of the private sector and the economy in general.

Tetyana Viktorova