Ukrainian media quoted sources saying that Ukraine seems to be discussing measures to increase taxes due to increased defense costs after more than 2 years of war with Russia.
Due to rising military costs, Kiev is discussing increasing military personal income tax and value added tax (VAT).
According to the above news site, Finance Minister Serhii Marchenko appears to estimate Ukraine’s budget deficit due to military spending at $5 billion. At the same time, other sources estimate the country’s budget needs 400-500 billion hryvnia (about 10-12 billion USD).
“According to three parliamentarians, the government is planning to increase the military tax rate from 1.5% to 5%. Two parliamentarians from the finance and economic sector said that a similar tax rate of 5% could be applied to entrepreneurs,” Forbes Ukraine said.
In addition, Ukraine seems to still be discussing the extent of VAT increases. The increase could be 2-3%. “These changes are not final, discussions about them are still ongoing,” Forbes Ukraine noted.
Forbes added that increasing the military tax rate from 1.5% to 5% for workers could bring an additional 90-100 billion hryvnia ($2.2-2.4 billion) per year to the budget. .
A 1% increase in the VAT rate would generate about 40 billion hryvnia ($997 million) in additional revenue annually. A 2-3% increase in VAT rates could help increase budget revenue by 70-120 billion hryvnia (1.7-2.9 billion USD).
The relevant draft law could be presented to the National Assembly in late June or early July. If the document is approved quickly, the new tariffs will take effect no earlier than September.
According to UP, this year, Ukraine needs about $3 billion in foreign funding each month to operate the government apparatus.
Ukraine has not commented on this information. After more than two years of conflict with Russia, Ukraine is facing the challenge of a war of attrition against an opponent with stronger economic and military potential.
In February, a study by the World Bank, the United Nations, the European Commission and the Ukrainian government showed that rebuilding the Ukrainian economy after Russia’s special military campaign is expected to cost money. 486 billion USD. This number may increase at present.
The report said direct damages from the war amounted to nearly $152 billion, with damage concentrated in areas such as Donetsk, Kharkov, Lugansk, Zaporizhia, Kherson and Kiev.
Disruption to economic output and trade, as well as other costs related to the war, such as clearing areas of fighting, are likely to increase costs by $499 billion. USD.
Ukraine has recently called on the US and its allies to transfer $300 billion in frozen funds from the Russian Central Bank to Kiev to rebuild the country.
In mid-month, US Secretary of State Antony Blinken said that Russia needs to cover the costs of rebuilding Ukraine, which has been devastated by conflict. Mr. Blinken announced that the US will confiscate Russian assets on US soil and freeze Russian assets abroad to help Ukraine rebuild.
Russia has criticized the moves by the US and Europe, and warned that it will respond accordingly.
Source: compiled
