Raising taxes during the war: People’s Deputy Roksolana Pidlas commented on the draft law

The revised draft law on raising taxes during the war No. 11416-d was registered in the Verkhovna Rada, as reported on the official website of the parliament. People’s deputies Danylo Hetmantsev and Andriy Motovylovets from the “Servant of the People” faction, as well as Oleksandr Lukashev from the “Restoration of Ukraine” parliamentary group were the authors of the draft law.

It was previously reported that the Committee on Finance, Tax and Customs Policy recommended that the Verkhovna Rada adopt this revised draft law as a basis for increasing tax rates. The head of the committee, Danylo Hetmantsev, noted that the draft law includes an increase in the military tax rate from 1.5% to 5%, as well as the establishment of a military tax in the amount of 1% of income for individual entrepreneurs (PPOs) who are taxpayers of the uniform tax of group III. and 10% of the minimum wage for single tax payers of groups I, II and IV.

People’s deputy of the Verkhovna Rada of the 9th convocation from the “Servant of the People” party, deputy head of the Committee on Economic Development Roksolana Pidlas commented tax innovations: 

“So, instead of UAH 125 billion in 2024, we will (perhaps) receive UAH 30 billion from tax increases. At the same time, the needs of the security and defense sector (which are provided only by internal revenues) remain at the level of almost UAH 500 billion.

What sources of expenditure coverage does the Ministry of Finance offer? Let’s compare the government project 11417 and the proposed “committee version” (which will be considered by the Budget Committee today):

About 115.4 billion UAH – reduction of expenses for servicing and repayment of the state debt (in the government version it was -125.6 billion UAH)

Additional about UAH 216 billion is planned to be raised from the placement of OVDP (+ UAH 160 billion was planned in the government version)

In addition, we receive about UAH 100 billion from the RE-IMPLEMENTATION of taxes and fees (and it was planned earlier – UAH 76 billion)

About UAH 12.7 billion – income from excise taxes on fuel and tobacco (it was UAH 13.7 billion)

About UAH 30 billion is expected revenue from new tax changes (UAH 125 billion was planned)

Reduction/rejection of new expenditures on the general and special fund by UAH 25.5 billion

The main positions for reducing expenses:

• UAH 11.2 billion – from the Ministry of Strategic and Industrial Production (from the program “development of the defense industry”. These are the funds of the so-called “military personal income tax”. At the same time, the Ministry has funds from this program from the general fund – UAH 7.7 billion per year is provided + the balance accumulated from beginning of the year of the “military personal income tax” under the special fund – about UAH 32 billion),
• UAH 8.6 billion – unused funds of the Ministry of Social Policy (the plan laid down in the budget exceeded the actual expenditures for 8 months of the year),
• UAH 4.5 billion – refused to replenish the Reserve Fund, which was in the government version (in August, the Government already redistributed almost UAH 30 billion to the Reserve Fund from the debt service program and others),
• UAH 1 billion – other reductions due to cost savings in the Ministry of Youth and Sports, the Ministry of Digital Affairs, the Ministry of Culture, the Ministry of Education, Culture, Sports, Science and Technology, the NAZK (for financing political parties), the Ministry of Reintegration, the Ministry of Reconstruction, the CEC (for the election of local deputies) and others,
• UAH 662.2 million from the State Customs Service,
• UAH 227.8 million – reduced expenses for the maintenance of government bodies (SCMU, State Production and Consumption Service, State Statistics Service, VACS, Supreme Court of Intellectual Property, State Geonadra, State Service of Maritime and Water Transport, State Energy Efficiency, State Tourism Agency, State Aviation Service, DASU, State Debt Management Agency, State Financial Monitoring, NADS and others).

At the same time, we will have to resume spending on servicing the state debt in the amount of UAH 14.9 billion, because in August (after the registration of draft law 11417) UAH 24.5 billion was directed from debt servicing to the Reserve Fund of the State Budget.

And they also created a new subvention for LGUs (+ UAH 2 billion) for feeding primary school students.

Another important provision of the “committee version” of the draft law 11417 – it is proposed to change the principle of distribution of the “military personal income tax” for three months of 2024: now only 25% of the “military personal income tax” goes to the general fund of the state budget, it is proposed to increase this share to 59%, and for a special to keep 41% of the fund and cancel the allocation of the “military income tax” to the Ministry of Strategy and Industry (I wrote above that this will increase the budget resource for the Armed Forces and other military by UAH 11.2 billion)”.