The Verkhovna Rada of Ukraine failed to gather enough votes to pass in the first reading draft law No. 11416-d, which provided for an increase in taxes. As MP Yaroslav Zheleznyak reported on his Telegram channel, the draft law was supported by only 224 deputies, which is 2 votes less than necessary for a decision.
Tax increase bill: details of failure
The bill, which would have increased taxes by 30 billion hryvnias in 2024, was sent to a second first reading after a failed vote. According to Zheleznyak, the government aimed to increase budget revenues, which this year will amount to only 30 billion hryvnias out of the planned 125 billion, and for 2024 they predicted an increase to 127 billion hryvnias out of the required 340 billion.
Planned changes in taxation: what was foreseen
For the first time since the beginning of Russia's full-scale invasion of Ukraine, the government has proposed raising taxes. This decision was motivated by the need to increase state budget revenues, in particular to finance military needs. The plans included increasing the military levy rate from 1.5% to 5%, as well as introducing this levy for individual entrepreneurs (IEPs). For single tax payers of Group III, the military levy was to be 1% of income, and for IEPs of Groups I, II, and IV, it was to be 10% of the minimum wage.
Why didn't the bill pass?
The failure of the vote indicates a lack of consensus among MPs on the necessity and feasibility of such a significant tax increase in a time of war and economic instability. Some MPs expressed concern that increasing the tax burden on businesses and citizens could negatively affect economic activity and the general situation of Ukrainians.
What's next?
Sending the bill for a second first reading means that the government and parliament will continue discussing and possibly making adjustments to the proposed changes. However, given the current level of support, achieving the required number of votes remains questionable. It is obvious that additional consultations and compromises among the parliamentary body will be necessary before a second vote.
