The support of international donors, the restructuring of the commercial debt and the increase in taxes should be considered as a single package for the elimination of Ukraine’s financing deficit, considers head of the International Monetary Fund (IMF) mission in Ukraine, Gavin Gray.
“Progress in the adoption of the tax package will affect the willingness of donors to continue supporting Ukraine,” he said during a discussion on the state budget deficit, organized by the Center for Economic Strategy (CES).
Gray noted that all three elements of the single package are aimed at the result of effectively eliminating the funding gap.
“You should not think that these are independent elements, they are interconnected”, – believes the head of the mission.
According to Gray, with the approval of the tax package announced by the government, the readiness of Ukraine’s international partners to continue support will be higher, as it will be evidence for them of the state’s efforts to acquire greater self-sufficiency and independence from foreign aid, given the significant expenses in the medium term.
As reported, in July the government submitted to the Council a draft law on increasing state budget expenditures for 2024 by UAH 434.6 billion, which will be provided by UAH 214.5 billion in additional revenues and UAH 220.1 billion in additional funding: UAH 160.2 billion increase the sale of OVDP bonds to banks and a UAH 59.8 billion reduction in payments for repayment of the state debt.
It is proposed to provide additional revenues, in particular, thanks to the adoption of the draft law introduced at the same time with amendments to the Tax Code and other laws on the peculiarities of taxation during the period of martial law (No. 11416), which provides for an increase in taxes by UAH 125 billion this year and by UAH 341.9 billion – next year.
Among the main initiatives of the government is an increase in the rate of the military levy on the income of individuals from 1.5% to 5% (estimated additional income is about 45.5 billion UAH) and its payment by private sector organizations in the amount of 800 UAH per month (2.3 billion UAH), and as well as the introduction of a military levy for legal entities and FOPs of the 3rd group in the amount of 1% of income (50.5 billion UAH).
It is also proposed to increase or introduce, where it currently does not exist, a military levy of 5% on mobile communications (0.9 billion UAH), the purchase of bank metals (0.02 billion UAH) and real estate (with the exception of one object per year ) (1.2 billion UAH), 15% – for the purchase of cars for their first registration in Ukraine (10.2 billion UAH) and 30% – for the purchase of jewelry with payment by its retailers (0.14 billion UAH).
Among other innovations is the monthly payment of advance payments from the corporate income tax by fuel retailers in the amount of UAH 0.5 million per 1 cubic meter. m of tanks for fuel storage (8.3 billion UAH), establishment of a specific excise tax rate of 0.1 euro per 1 liter of drinks with added sugar or other sweeteners (2.4 billion UAH), lowering the threshold for duty-free parcels from abroad from EUR150 to EUR45 (3.3 billion UAH).
After sharp criticism of this bill, a preliminary agreement was reached to replace the 1% corporate tax on turnover with an increase in VAT by several percentage points from the current level of 20% and the introduction of a fixed payment for gas station storage instead of an advance tax.
