Operation “Squeeze the Middle Class”: How Governments Perfected Tax Extortion

Source: Author’s Facebook page

A routine update on the Ministry of Finance website has sent a shiver through Ukraine’s economy. Stripped of its bureaucratic euphemisms about “automation,” the proposal looks disturbingly like a manual for financial control, last perfected at the Lubyanka.

Deputy Minister of Finance Svitlana Vorobey and People’s Deputy Ihor Marchuk—loyal “minions” of Danylo Hetmantsev—held a meeting at which they effectively announced fiscal punishment for the simplified taxation system. The issue on the table was the introduction of VAT for single taxpayers.

Let us dismantle this act of betrayal brick by brick, using their own words and the reality they are trying to conceal.

1. The Lie About “Fear” and “Free Cheese.”

The Ministry of Finance delivers its key message: “We have heard the fears of business… We are currently drafting regulations in a way that will protect honest entrepreneurs as much as possible.”

Stop. What “fears”? This is not anxiety; it is outrage, resistance, and outright rejection. When you talk about imposing VAT on microbusinesses, you are not talking about “protection.” You are talking about a noose.

Calling this reaction “fears” is like an executioner telling his victim: “I understand your concerns about the axe, so I’ve sharpened it to make things more comfortable.” Yuzhanina is absolutely right to call this blasphemy.

The promise of a “tax credit accumulation period” is nothing more than the classic free cheese in a mousetrap. You are being lured into a system from which there is no escape.

2. Destruction Mechanics: Unconscious VAT

What do these “theorists” actually propose? Automatic registration as VAT payers—without an application, without consent, without even awareness of the moment it takes effect.

An individual entrepreneur sells goods at a market, sews clothes, or repairs cranes. Then, suddenly, a tax algorithm decides that the “threshold has been exceeded” (the data is already in the RRO). The next morning, that entrepreneur wakes up, owing 20 percent VAT on every hryvnia.

For ordinary people—those without the legal departments of large corporations behind them—this is a death sentence. This is not a “surprise.” It is a retroactive bankruptcy.

They promise a “one-click declaration”? Spare us. That is a basic software function, not a breakthrough.

Behind this polished façade lies the key issue that Vorobey and Marchuk carefully avoid: SMKOR, the Tax Invoice Blocking System. Forcing individual entrepreneurs into VAT means forcing them onto the roller coaster.

Manicurists. Tutors. Tailors. Dozens of other self-employed professions. Small service providers. All of them will become hostages to an inspector who can freeze their work with a single mouse click—and demand a bribe to restore it.

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3. Double Standards: Whom Hetmantsev “Does Not See.”

And here we arrive at the central question—one that exposes this policy for what it really is: sabotage.

The authorities keep repeating the same mantra: “We need to replenish the budget.” Yet, for some reason, they have chosen to do so at the expense of the poorest and least protected.

Why should an individual entrepreneur be held responsible for everything while murky rivers of billions flow nearby—untouched, uninvestigated, unseen?

Question #1: Cryptocurrency

For years, we have been hearing about the imminent legalization of virtual assets. Ukraine ranks among the world’s top countries in terms of crypto usage. This is colossal—almost cosmic money flowing past the state budget.

So why has crypto regulation and taxation still not been introduced?

The answer is simple: crypto is the elites’ black market.

It is a convenient tool for officials, judges, prosecutors, and various “hetmans” to hide stolen assets and move them abroad. Taxing crypto would mean exposing themselves and their patrons to taxation.

That is why nothing happens. And that is why the individual entrepreneur will end up paying not only for himself, but also for the guy holding Bitcoin.

4. The “Transition Period” Is a Lie for the Gullible

They promise a “moratorium on fines” until 2027. I want to shout at the deputy minister: Stop. Look around. Think.

VAT is widely regarded as one of the most complex and compliance-heavy tax systems in global practice. For an individual entrepreneur, it is lethal. There is no point pretending that VAT is merely “planned to be automated.” It already exists inside a system populated by monsters: the Unified State Register of Tax Invoices, the State Tax Service of Ukraine, endless reporting requirements, and punitive enforcement mechanisms.

And now you want to dump all of this hell onto people who are simply trying to survive during a war?

The real question is simple: will there be a “transition period” for inspection bodies? Will they stop being a nightmare for businesses?

No.

2027 is not a grace period. It is a deadline by which small businesses  will not survive these so-called “reforms.”

5. Sivkovych’s Trace: Why Are They Doing This?

Danylo Hetmantsev is not merely a personnel mistake. He is a systemic agent of influence. His ties to Volodymyr Sivkovych, a known FSB agent, shed light on much of his agenda.

What is the Kremlin’s goal behind the scenes in Ukraine?

Economic ruin: a strategy designed to make it impossible for Ukrainians to earn a living. Destroy the middle class. Self-employed individuals are the backbone of civil society and volunteer efforts. A poor, handout-dependent Ukrainian will not buy a drone for the Armed Forces.

The plan is to squeeze people dry. Create conditions that push the productive population to immigrate to Europe, where tax authorities operate as a service rather than a tool of punishment.

This initiative from the Ministry of Finance is a textbook implementation of Sivkovych’s method. Instead of collecting taxes from crypto millionaires, brothel owners, and shadow traders, Hetmantsev has chosen to extract the last drops from the real sector of the economy.

Conclusion

This is not reform but fiscal terror: a reckless experiment on society that threatens the economy of a country struggling to survive. Anyone who silently watches this so-called “automatic improvement” becomes an accomplice in the destruction of Ukraine’s home front.

Hetmantsev and his team are not building Europe. They are constructing a fiscal Gulag, while real money flows out through the crypto wallets of their patrons. The sooner they are removed from power, the greater the chance of lifting the noose from the neck of a barely surviving Ukrainian entrepreneur, already half-strangled by the Kremlin’s henchmen.

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