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Pricing - Yerukhimovich IL

3.3. State regulation of prices

The pricing policy is part of the economic and social policies of any state. The government bodies build their relations with commodity producers, using the following levers:

• tax and financial and credit policies, including the establishment of tax rates and tax incentives, prices and pricing rules, subsidies, economic sanctions and licenses, social and environmental norms and standards;

• scientific, technical, economic and social state and regional programs;

• state orders for the production of products, works and services for state needs.

The level and the ratio of prices for manufactured and non-production goods affect the interests of all subjects of productive activity, the non-productive sphere and the population.

The basic principles for the establishment and application of prices for goods and tariffs for services, as well as the organization of control over their observance on the territory of Ukraine are determined by the Law of Ukraine "On Pricing and Pricing" and other legislative and regulatory documents [4; 6; 7]. The effect of this Law applies to all enterprises and organizations, regardless of the form of ownership and subordination. According to this law, free, state fixed and government regulated prices and tariffs, as well as contractual (foreign trade) prices are applied in the national economy of Ukraine.

The state's actions in price regulation can be short-term and long-term.

State regulation in the field of pricing and the application of prices is carried out by various methods, among which we can distinguish:

• definition of the list of products and services subject to state regulation, including monopoly products;

• Establishment of maximum levels of prices and tariffs, as well as trade mark-ups (discounts);

• Rationing profitability;

• Freezing of prices.

First of all, state regulation is subject to prices for products and services of state-owned enterprises. These include tariffs for rail transportation, utilities and housing, telecommunication services, etc.

In crisis situations, state bodies can set the marginal prices for goods of the non-state sector (bread and bakery products, butter and milk products, baby food, etc.).

The world practice has enough examples when the level of prices for certain goods of non-state enterprises is approved by a decision of interstate bodies (setting prices for coal and ferrous metals by the European coal and steel association, oil prices by OPEC countries, purchasing prices for agricultural products by EU countries, ).

The methods of price regulation include the establishment of value added tax and the amount of excise duty.

Exemption of certain goods from VAT, as well as changes in the rate of this tax on certain goods, can effectively influence structural changes and the development of production in the desired areas.

In most countries, a list of excisable goods and the amount of excise duty have been established, which significantly affect prices. The purpose of such state intervention in pricing is to regulate the consumption of goods, protect domestic producers, regulate the profit of producers in the event of a large difference between prices and production costs, replenish the state budget.

Some industries require constant state support (for example, the coal industry) in the form of subsidies to producers or consumers.

Of great importance is the government regulation of prices in foreign trade. Enterprises - subjects of foreign economic activity - determine specific prices on contractual terms taking into account supply and demand. In some cases, contract prices should be determined in accordance with indicative prices (more detailed about this is written in Section 4.4), which are established by the Ministry of Foreign Economic Relations.

In the world practice, other methods of state influence on prices are also used. This is achieved by antitrust laws, unfair trade laws (in particular, anti-dumping legislation), price advertising, etc.

State regulation of prices may provide for legislative and judicial measures. In one case, pricing in the state is regulated by the laws of the Verkhovna Rada, in the other - by orders of state and local authorities, in the third - certain disputable issues are resolved in judicial (arbitration) order. It should be noted that in all cases, certain restrictions, rules, regulations that are mandatory for market participants are established.

State control over prices is carried out in the sphere of effect of state fixed and regulated prices and tariffs. In the sphere of free prices, the lawfulness of their application and compliance with the requirements of the antimonopoly legislation are controlled. This control is exercised by the bodies to which these functions are entrusted by the government. In Ukraine, such bodies are the State Inspectorate for Control over Prices under the Ministry of Economy and the State Committee of Ukraine on Consumer Protection.

Persons guilty of violating the procedure for establishing and applying prices and tariffs are brought to administrative or criminal responsibility.