Ukraine is once again on the verge of raising taxes, but, as always, the burden of new financial demands will fall on the shoulders of ordinary people, not the richest strata of society. By in words economist and financial analyst Oleksiy Kushcha, instead of additional taxation of labor income and entrepreneurial activity, the government could take a radical step and introduce a tax on excess profits of banks and luxury purchases. This would avoid increasing the burden on ordinary citizens.
UAH 57 billion or UAH 30 billion? Two ways
The parliament is working on a new draft law, which provides for an increase in the military levy from 1.5% to 5%. In addition, it is planned to introduce a 1% fee for the third group of FOPs, as well as other taxes, in particular, on gas stations. However, at the same time, there is a discussion about the introduction of an additional tax on bank profits in the amount of 50%, which, by analogy with Western practices, is called a “windfall tax”. Such a tax could bring UAH 27 billion to the budget — almost as much as it is planned to receive from the increase in taxes on labor and entrepreneurship.
If we approach this question from the other side, by increasing the tax on excess profits of banks, it would be possible to avoid burdening the salaries of ordinary citizens and small businesses with additional taxes.
“Which is better – UAH 57 billion or UAH 30 billion? Looking at how to calculate. In the parliament, they want to push through a new bill on taxes. Everything is as before: an increase in the military levy from 1.5% to 5%. Plus a 1% levy for the third group of non-governmental organizations Well, there are also small things: collection from gas stations, etc.
But the battle for an additional 50% tax on bank profits is starting again. Something similar to a tax on “windblown income” – such was sometimes used in the West. This tax can give UAH 27 billion, that is, almost as much as the increase in taxes on labor (military levy) and entrepreneurship.
And if you look at it from another angle, then by raising the tax on excess profits of banks, you can completely abandon additional taxes on salaries and small businesses.
But not like that,” – noted the expert.
Banks under protection: who benefits from the status quo
Despite the potential of a tax on excess profits of banks, the National Bank of Ukraine and the Ministry of Finance categorically opposed this initiative. Moreover, they threaten to include a clause on the impossibility of such taxation in the memorandum with the IMF, using the already familiar practice of presenting their own negative decisions as demands of international organizations.
This indicates a higher level of cynicism: when there is a lack of money in the country, however, the excess profits of the banks, which reached the level of UAH 227 billion due to the NBU subsidies during the war, remain intact. At the same time, the profitability of capital in banks exceeds 30%, and a decrease of this indicator to 15-20%, according to the NBU and the Ministry of Finance, will cause “significant losses” to banks. Doesn’t that look like an insult to the intelligence of the citizens?
“The National Bank of Ukraine and the Ministry of Finance were categorically AGAINST raising taxes on banks’ excess profits.
Moreover, they threatened to include a clause on the impossibility of such taxation in the memorandum with the IMF (then it will be presented as a demand of the fund itself — a well-known practice of our officials in camouflaging their negative decisions under the demands of the IMF).
Imagine the level of cynicism, which is higher than the level of unprincipledness. There is no money in the country, but there are surplus profits of the banks, inflated due to the subsidies of the NBU in the amount of UAH 227 billion of interest on deposit certificates during the war. So this profit cannot even be taxed at a higher rate.
The return on capital in banks (ROE) is now more than 30%, and the NBU and the Ministry of Finance believe that if it is reduced to 15-20%, the banks will suffer greatly.
Do they think everyone is an idiot?
No one even thinks about other sources of filling the budget: they look for money not where it is, but where it is easiest to take it.” – believes Oleksiy Kush.
The expert noted that while the government focuses on collecting additional taxes from citizens, there are other, less painful for society, sources of filling the budget. For example, the introduction of a progressive tax on the income of high-net-worth individuals. According to NBU estimates, during the war the share of wealthy Ukrainians increased from 5% to 8%. A progressive tax would avoid raising the military levy for minimum wages and protect the poorest sections of the population.
Also, it would be possible to consider an increased VAT on luxury goods, a reduction in VAT refunds for the export of raw materials or the introduction of export duties. However, the government prefers not to pay attention to these opportunities, and continues to put pressure on the incomes of ordinary citizens by collecting taxes where they are easiest to take.
Who benefits from this?
Oleksiy Kush believes that if you analyze the situation, it becomes obvious: the government protects the interests of banks and big business, leaving ordinary citizens alone with new tax burdens. For government officials, the interests of the IMF and large corporations are more important than the welfare of the population. After all, collecting taxes from the salaries of state employees is the easiest way to fill the state treasury.
Thus, instead of using available and logical reserves that could reduce the tax burden on citizens, the government is again following the tried and tested path of taxing those who cannot protect their interests.
“What real sources are we talking about? For example, the introduction of a progressive income tax for individuals with high incomes (25% at the base rate of 18%). We are, of course, not talking about the military. After all, even the NBU itself noted in its analysis the growth of the stratum of the rich in Ukraine during the war from 5% to 8%.A progressive income tax would allow not to introduce an increased military levy on the minimum wage for the poorest.
I am generally silent about such tax reserves as the increased VAT on luxury goods, the reduction of VAT refunds for the export of raw materials, and the export duty on raw materials. In a raw material country, export duties bring… 500 million hryvnias per year, or the equivalent of 12 million dollars. The reserves are very large there. Their involvement would make it possible to completely abandon the increase in taxes on the incomes of ordinary citizens.
But who needs them, these ordinary citizens?
The Ministry of Finance and the National Bank of Ukraine look after the profits of banks, the IMF listens to what the Ministry of Finance and the National Bank of Ukraine have to say, and sanctifies what is said with its memoranda, which for the heads of these departments are more important than the Constitution.
In addition, it is much easier to extract taxes from ordinary citizens when paying salaries, especially state employees. No one will even care about some 5% there. From the world by a thread – a rich shirt Briony…”, – summarized the expert.
The personal opinion of the expert may not coincide with the editorial position.
