Ukrainians are expecting tax mobilization – the authorities will be looking for an additional trillion hryvnia to close the hole in the budget.
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There may not be enough money to finance the army. What ideas are the authorities discussing to obtain additional resources within the country and is it possible to increase taxes, says Economic Truth.
According to ED interlocutors involved in the search for additional budgetary resources, now the main strategy of the state is to try to increase the opportunities of the government bonds market and raise taxes.
As part of the implementation of the IMF program, the government plans to introduce additional taxation in the amount of 0.1% of the military tax on the profits of enterprises and income of individual entrepreneurs, 1.5% on the value of precious metals, 30% on the value of jewelry, 10% on the value of movable property .
The possibilities of additional taxation of real estate transactions and the introduction of an additional tax on some other transactions are also being calculated.
In total, these tax measures should fulfill the IMF program point. The only problem is that 0.5% of GDP, by which budget revenues can increase, is about UAH 40 billion. That is, the additional taxes that the fund requires from Ukraine will cover a tenth of the state’s needs for additional resources for the army.
To raise the remaining necessary domestic resource, much more radical tax changes need to be made. In particular, revise the rates of the main taxes: VAT and income tax.
To cover the need of more than 400 billion UAH, the authorities need to increase the VAT and military tax rates by approximately 6-7%. At the same time, it is necessary to take into account the Laffer effect, that is, the possibility that with an increase in the tax burden, many companies will go into the shadows, and the additional fiscal effect will not be as great as expected.
The authorities understand that the idea of raising taxes is extremely unpopular. That’s why politicians talk about it off the record. However, sooner or later, society will have to tell the truth: the Ukrainian budget is critically short of funds for maintaining the army, and it is better to start talking about how to raise them now, so as not to have to make a decision again in hindsight.
Source: Racurs
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