Conflict of interests: the government and business have not found a common language regarding taxes

On July 31, a meeting of the Council of Entrepreneurs took place with government representatives, where they discussed draft law No. 11416, which provides for an increase in taxes. Entrepreneurs expressed concern about the possible consequences of this decision and disagreed with the government’s position.

The meeting lasted 2.5 hours and aimed to assess whether the government used all opportunities to optimize budget expenditures and increase revenues. write Forbes.

The meeting was attended by the co-founder of monobank Oleg Horohovskyi, the head of the Federation of Employers Dmytro Oliynyk, the head of the supervisory board of Ajax Oleksandr Konotopskyi, the co-owner of the Biopharma company Konstantin Yefimenko, the co-founder of Nova Poshta Vyacheslav Klimov and the founder of Netpeak Group Artem Borodatyuk. On behalf of the government, the Head of the Office of the President Andriy Yermak, Prime Minister Denys Shmyhal, First Deputy Prime Minister Yulia Svyridenko, Minister of Finance Serhiy Marchenko, Minister of Defense Rustem Umyerov and Chairman of the Tax Committee of the Verkhovna Rada Danylo Hetmantsev were present at the meeting.

Business position

Business does not support the government’s decision to raise taxes and believes that there are other ways to fill the budget, in particular, detinization of the economy. Oleg Horokhovskyi noted, that increasing taxes could shadow the economy and destroy small and medium-sized businesses, ultimately reducing tax revenues.

Entrepreneurs believe that it is important to focus on the fair administration of taxes and to ensure their payment by all subjects, in particular, large companies that use the schemes of crushing on FOP, paying salaries “in envelopes” and bypassing excise taxes. They also emphasized that economic mobilization can bring billions of hryvnias to the budget. In addition, entrepreneurs expressed concern about the situation when importers receive higher profits than exporters in conditions of a negative balance of foreign trade.

Horokhovsky also noted that one of the sources that can provide the necessary funds for the budget is the liberalization of the market of virtual assets and the sale of property confiscated in Russia.

The government’s argument

Government representatives emphasized that with a budget deficit of more than UAH 500 billion, raising taxes is a difficult but inevitable decision. Danylo Hetmantsev explained that the additional funds will be used to pay the salaries of the military (60%) and to purchase weapons, equipment and other critical expenses (40%).

“Constructively and with an understanding of all the circumstances of a difficult, but no-alternative decision. We all understand that the decision is painful, but necessary. The military levy and turnover tax cause the most questions. Together with the Ministry of Finance, we discussed possible alternatives in the form of VAT and the cancellation of some benefits.”, – wrote Getmantsev.

The government also explained that additional funds will be raised from several sources. Almost 3/4 of the funds are planned to be obtained at the expense of increasing domestic borrowing and over-fulfillment of current state budget revenues, including at the expense of detinization of the economy. About 1/4 of the funds are planned to be obtained by revising the tax system.

If the Council does not support the government’s tax package, there may be problems with military payments as early as September.