Finance Ministry ready for compromise with parliament on taxes
The Ministry of Finance is ready for a compromise with the Verkhovna Rada on the issue of raising taxes, Minister Sergii Marchenko said in an interview with RBC-Ukraine.
How exactly 120 billion hryvnias ($2.9 billion) of additional revenues will be provided by the end of 2024 depends on the decision of the parliament. The Ministry of Finance proposed to increase the military levy for this purpose, but there are calls in the legislature to increase the value-added tax.
"Are we ready for a compromise? We are always ready to look for compromise solutions to get 226 votes," Marchenko said.
He expects that the decision will be made very quickly, because the money is urgently needed for the security and defense sector.
"We have a pause due to a break in the work of the Rada, and this pause worries us. But I hope that after the forced break, the parliament will quickly make the necessary decisions [...] I'll be honest: the situation is critical," said the official.
He explained that earlier the government could not introduce the bill because it was limited by the framework of the program with the International Monetary Fund.
If the government had announced the tax initiatives before the meeting of the executive board of the IMF, which took place on June 30, it would not have taken place and Ukraine would not have received another tranche of a loan in the amount of $2.2 billion.
"Perhaps, in 2023, the mentioned tax initiatives would be more appropriate than in the middle of 2024. But we reacted to the situation that was developing. And we had no other options," Marchenko said.
The bill of the Cabinet of Ministers proposes to increase the military levy from 1.5% to 5%, to extend it to sole proprietors and certain transactions, such as the sale of jewelry, real estate, the purchase of bank metals or new cars.
Minister of Finance Sergii Marchenko called on the Verkhovna Rada to support the draft law on raising military levy to finance the army. This is a difficult but necessary step, he said.
Russia has already raised taxes to finance the war against Ukraine. The aggressor state did this by introducing a differentiated personal income tax rate (PIT) and raising the income tax.
