The Chairman of the Finance Committee of the Verkhovna Rada of Ukraine, Danylo Hetmantsev, announced that the working group, which is engaged in the development of the government's draft law on raising taxes, agreed to increase the military levy on citizens' incomes from 1.5% to 5%. Also, a 1% military levy will be introduced for individual entrepreneurs of the third group. This decision caused a wide response among economists and entrepreneurs who express concern about its consequences for business and the country's economy in general.
It is worth noting that during the discussion of the draft law, an increase in the bank profit tax from 25% to 50% was excluded. This happened due to the categorical position of the Ministry of Finance and the National Bank of Ukraine, which opposed such a step. As Hetmantsev noted, the increase in the bank profit tax was not agreed due to risks to the stability of the banking sector, which shows significant financial results.
Financial condition of Ukrainian banks: growth of profits
In the first seven months of 2024, the net profit of Ukrainian banks after taxation amounted to 93.6 billion hryvnias, which exceeds last year's figures. According to the data of the National Bank of Ukraine, the income of banks during this period increased by 17% and amounted to 293.7 billion hryvnias, in particular, interest income increased by 20.1% and reached 201.8 billion hryvnias. This testifies to the stability and even growth of the financial sector in wartime conditions, which makes the decision not to increase the bank income tax understandable.
Criticism of economic policy: Mykhailo Kuhar on the risks of tax increases
Mykhailo Kuhar, senior economist at Ukraine Economic Outlook, expressed sharp criticism of the government's plans to raise taxes in Ukraine. In his post on the Facebook social network, Kuhar drew attention to the fact that Ukraine's budget for 2023 was overexecuted by 56% compared to the plan, and the projected overexecution of the 2024 budget is at least 30%. Kuhar noted that with businesses going bankrupt and workers losing their jobs, tax increases could seriously threaten the survival of the private sector of the economy.
According to Kuhar, the situation when Ukraine's budget is not only fulfilled, but also exceeded, and Western financing significantly exceeds the planned indicators, does not require additional tax pressure on citizens and businesses. He called the plans to raise taxes "sabotage against the internal economy of Ukraine in the war" and called on the government to reconsider its position.
