In the context of a significant decrease in economic assistance from Western partners, the Cabinet of Ministers is looking for additional sources of funding for the state budget. Back in the summer of last year, information appeared that the government was preparing a bill to increase the military tax to 4.5% in 2024 and direct 50% of the revenues from the military levy exclusively to the needs of the Armed Forces of Ukraine for the duration of the legal regime of martial law in Ukraine.
The Ukrainian authorities have the prerequisites for such a step - the financial flow from the West has begun to dry up, and the authorities have to look for money by any means. It should be noted that Ukraine will need an additional about 400 billion UAH just to finance the Armed Forces of Ukraine. And to collect these funds, radical tax changes will be needed. This may involve raising the rates of the main taxes: VAT and income tax. That is, to cover the need in the amount of more than 400 billion UAH, the authorities need to increase the rates of VAT and military levy by about 6-7%.
By the way, we already know about the “first swallow” of upcoming taxes – according to Hetmantsev, the head of the Council’s Committee on Finance, Tax and Customs Policy, the Cabinet of Ministers is preparing a bill on military levy for private entrepreneurs to ensure additional revenues to the budget. The People’s Deputy notes that the government has prepared a set of proposals, thanks to which it is planned to replenish the budget by UAH 44 billion, and the corresponding bill is expected this month.
To close the “hole” in the state budget, it will be necessary not only to increase the military tax, but also to increase excise duties, introduce monthly advance payments of income tax for gas stations, etc. Moreover, changes in the payment of the military tax will apply to legal entities that pay corporate income tax and single tax payers of groups III and IV, as well as individual entrepreneurs who pay single tax of groups I, II, III and IV.
In addition, an additional military levy will be levied on buyers of bank metals from banks and cars subject to first state registration in Ukraine, sellers of real estate, retailers of gold, platinum and precious stones jewelry, as well as mobile operators providing any mobile communication services. The proposals also provide for bringing the excise tax on fuel into line with EU minimum standards, introducing an excise tax on water, including mineral and carbonated, with added sugar or other sweeteners or flavorings, etc.
For our part, we note that inconsistency, distrust, and the return of the ideology of aggressive tax collection are negative, if not fatal, “companions” for the recovery of the economy of a warring country. People have been giving almost every penny to the Armed Forces of Ukraine for a year and a half, paying military fees for years, and during wartime they also volunteer, effectively “maintaining” the Ukrainian army. And if with donations and charitable assistance, Ukrainians at least understand where their money goes, then the military fee has no specific purpose, it is sent directly to the state budget, and society does not see how it is used.
