Is there an alternative to the tax pressure: an expert offers four steps to financial stability without increasing taxes
There are active discussions in Ukraine about a possible tax increase, and, as always, these discussions are initiated by the government. The government has prepared a bill that dramatically increases taxes for citizens. The most recent trend in the government’s argumentation in favor of increasing taxes is the need to provide funding for military personnel, especially in the conditions of martial law.
This move has caused mixed reactions among experts and the public, because on the one hand, it provides necessary resources for the army, and on the other hand, it additionally burdens citizens and businesses, who are already going through difficult times.
However, are there alternatives to this solution? Does the government have any other mechanisms besides raising taxes? To these questions answered economist Andrii Novak. In his opinion, tax increases can be avoided if the issue of budget optimization is approached systematically. He is convinced that there are several key areas that can significantly increase budget revenues without the need to increase tax pressure on citizens and businesses. And all of them relate to the optimization of current tax mechanisms and practices.
- Optimization of income. “If we ban the use of any offshore companies in foreign economic transactions, i.e. close absolutely all possibilities of using offshore companies, this will additionally bring several hundred billion hryvnias to the budget of Ukraine every year”, – believes Novak.
- Cancellation of VAT refund. “If we ban VAT refunds, at least fictitious VAT refunds for companies that are not actually engaged in any export, it will also bring several hundred billion hryvnias of additional revenues to the budget,” says Novak.
- Fight against smuggling. “Close all possible loopholes – black, white, gray, green – at customs. This is again hundreds of billions of hryvnias every year,” – the expert emphasizes.
- Fighting schemes in the tax office. “Schemes in the tax office, the so-called complications, are also hundreds of billions of hryvnias every year”, – Novak says.
According to the expert’s calculations, Ukraine can receive an additional trillion hryvnias per year by implementing these measures.
