Tax increase will not close any holes in the budget, - Odesa MP

The tax increase planned by the Verkhovna Rada of Ukraine will not help close the budget gap and will have a short-term effect.

This opinion was expressed by Oleksandr Slavskyi, a deputy of the Odesa City Council , on the air of Intent.Insight.

The deputy noted that the state's need for money is obvious, but it is unlikely that tax increases will be able to solve it.

"The Verkhovna Rada thinks it can increase budget revenues by raising taxes. I don't think so, I'm generally in favor of more liberal approaches, when taxes are reduced and procedures for doing business are eased. I think that international partners and funds will fill the gaps, at least they have been doing so in recent years. And this increase, if it has any effect, will be short-lived," the MP said.

Oleksandr Slavskyi also noted that currently most of the taxes are spent on the needs of the army, while the country's humanitarian needs are covered by the assistance of international partners.

On September 17, the Verkhovna Rada of Ukraine supported in the first reading the draft law No. 11416-d on tax increases.

The new tax package includes

• Increasing the military tax from 1.5% to 5%;
• Establishment of the CPT in the amount of 1% of the income of single tax payers of the third group;
• tax increases for Group 1 and 2 individual entrepreneurs;
• advance payments for gas stations;
• setting the corporate income tax rate for banks at 50% for 2024;
• setting the corporate income tax rate for non-bank financial institutions (except for insurers) at 25%.

This is expected to raise an additional UAH 58 billion in 2024 and UAH 137 billion in 2025.

At the end of August, the Parliamentary Committee on Finance approved as a basis the revised draft law on amendments to the Tax Code regarding the specifics of taxation during martial law.

It should be noted that the head of Odesa regional administration, Oleh Kiper, recently met with representatives of Odesa' s providers to discuss a problem related to taxes. The fact is that most providers currently operate under a simplified taxation system, but according to the Law on Electronic Communications, which came into force on January 1, 2022, all Internet service providers are ordered to make changes to their tax data and switch to paying other taxes (not just the single tax on turnover) starting October 1, 2024.

Кирило Бойко