Less than a month ago, Ukraine’s Ministry of Finance proposed raising taxes to gather an additional Hr.500 billion ($12.5 billion) for defense, with Hr.140 billion ($3.5 billion) coming from higher taxes. The delay in US military aid left the country facing a liquidity crisis, further exacerbated by Russia’s advances and a shortage of ammunition.
The proposed bill includes increased military taxes on personal income, corporate revenues, and various goods and services. While some argue for better tax administration and reducing state budget expenditures, others express concerns about fuel taxes and military taxes on personal income.
Critics, including Ukrainian entrepreneurs and business associations, fear that raising taxes could worsen the shadow economy. Despite the challenges, Ukraine’s Minister of Finance insists that reducing budget expenditures is not a viable solution.
The discussions around tax reform have sparked productive debates, with proposed amendments and compromises. However, the decision to raise taxes remains a tough one for all involved.
In a culture where individual interests often outweigh collective well-being, the push for higher taxes faces significant challenges. While trust in tax institutions remains low, the need to secure funds for defense is becoming increasingly urgent.
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