The tax increase proposed by the government may lead to Ukrainian entrepreneurs relocating abroad, and the effect of additional budget revenues will be temporary. This opinion was expressed by Nina Yuzhanina, a member of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, in an exclusive commentary to UNN .
Details
The government has submitted to the Verkhovna Rada draft laws on tax increases and amendments to the state budget for 2024. The Cabinet of Ministers proposes to the parliament to increase the military tax rate to 5%, and for some transactions to 30%. Hetmantsev supported the government's initiative, noting that he sees no other options than to agree to the Cabinet's proposal to raise certain taxes (military duty, excise taxes, in particular, on fuel and tobacco), increase the relevant tax base, and place more government bonds, which may also include NBU issuance.
"Yes, this is a bad decision that will hinder economic recovery, the growth of citizens' incomes and potentially pose risks to macrofinancial stability. However, there is no other way than to close the gap in the military now, because in a few months we will face a significant shortage of funds for the current maintenance of the army, which will begin to deepen sharply by the end of the year," Hetmantsev wrote .
Of course, we are just beginning to discuss... but there will be a tough dialogue ahead, and it is precisely because this draft law was rolled out without even discussing it with the members of the (tax - ed.) committee, without hearing the proposal to issue such a crude draft that will simply shake the whole country so that entrepreneurs make decisions now and continue to move not to the West but to Eastern Europe, I'm sorry, this is an ill-considered act and not a well-thought-out policy. I think there will be more negatives than positives. Perhaps in the short term, there will be some additional revenues, but they will be absorbed in the shadow economy, in the fact that business will be reduced
She added that the draft law on tax increases can be divided into several blocks. "As for the administration and provision of additional powers and requirements for business in the tax office, it is obvious that such a right exaggerates the state control in Ukraine in general. And the second block concerns taxes, which obviously neither the Ministry of Economy nor the head of the relevant committee have thought through to the end, this definitely applies, for example, to 1% of turnover for companies on the general and simplified taxation system," Yuzhanina said.
According to her, after the introduction of this tax, Ukrainian producers will not be competitive with importers and producers of imported goods, because sellers of raw materials and processors will have to pay 1% of the turnover, and then sellers of finished goods. "In other words, it will not be 1%, but at least 3%. And only 1% will be added for imported goods," Yuzhanina said.
The MP added that the issue of raising the military tax rate on goods that may not be used during the war should also be carefully considered. Using the example of cars, Yuzhanina noted that it is not yet clear whether the increase in the military tax rate will apply to new cars only or to used cars, and which first registration is in question.
At the same time, she said, the draft law does not stipulate that the funds received from the military fee should go to a special fund of the state budget.
Yuzhanina is convinced that before raising taxes, the expenditure side of the state budget for 2024 should first be analyzed and the funds that are there "just in case" should be removed. According to her, this would allow to raise an additional UAH 100 billion.
Was it possible to look for other options (to fill the budget - ed.) - of course it was. Just look at the amount of expenditures "sewn up" in the expenditure side of the state budget, which are generally... this is the specificity of our state budget formation - "just in case" there are funds there, they may or may not be used. Six months have already passed, and we can see that we did not have enough resources for a huge amount of expenses. Therefore, let's first audit the expenditure part - it will be somewhere up to UAH 100 billion, and then we will talk about how to move forward
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Earlier, the draft law that envisages tax increases was criticized by Yaroslav Zheleznyak, deputy chairman of the parliamentary tax committee. According to him, it is not clear why such tax changes are proposed and what calculations they are based on.
Recall
Hetmantsev has repeatedly voiced the idea of raising taxes in Ukraine. According to economic expert Yuriy Havrylechko, the elimination of the tax and customs services and the transfer of the economy to a war footing could be an alternative to Hetmantsev's idea of raising taxes to close the budget gap.