Ukraine is preparing to raise taxes due to the need to finance defense needs during a full-scale war. Head of the Committee on Finance and Tax Policy, Danylo Hetmantsev named this decision is unpopular, but vitally necessary for the preservation of state security and economic stability.
Hetmantsev emphasized that currently about 60% of state budget expenditures are directed to security and defense, which is about 40% of the country’s GDP. This level of spending is a significant burden for the economy of Ukraine.
Forced choice
“This is the worst solution we have on the table. It is bad for the economy. But when we choose between life and money, we definitely choose life. Therefore, we will probably have to make this decision”, – noted Hetmantsev.
VAT and military duty may increase
The chairman of the committee commented on the possible increase of the value added tax (VAT) and the military levy. He admitted that the increase in VAT will automatically increase the prices of goods and services, but emphasized the need for such measures to ensure the financing of the Ukrainian army.
Hetmantsev emphasized that the Ministry of Finance is in no hurry to refute insider information about the future increase in VAT and the military levy, because otherwise the required amounts are simply nowhere to be found.
Need for changes in tax policy
“Without changes in the main budget-forming taxes, it is impossible to collect the sum of 5 billion dollars (and the needs are greater).“, the deputy emphasized. The main sources of financing remain personal income tax, VAT, military levy and excise taxes. Moreover, excise taxes are already being changed – two draft laws were approved in the first reading.
Regarding the income tax, Hetmantsev noted that this tax is unlikely to change due to administrative difficulties and the long process of collecting funds. At the same time, there are no such problems with VAT and the military levy, which makes it possible to quickly attract the necessary finances to the state budget.
