Each Day of the War Costs Ukraine an Average of 5.6 Billion UAH

The government plans to increase taxes to support military expenses, while experts urge comprehensive economic reforms.

Key Highlights:

• Daily War Costs:

  • Ukraine's daily war costs average 5.6 billion UAH.
  • More than $1 billion is needed every 10 days.

• Financial Crisis:

  • Ukraine finances its military expenses primarily from its own resources.
  • Western partners provide financial assistance mainly for salaries of state employees and pensions.

• Proposed Tax Increases:

  • The government plans to raise taxes to fund the military.
  • Verkhovna Rada will consider bill No. 11416, which proposes significant tax increases.

Proposed Tax Changes:

1. Military Tax on Individual Income: Increase to 5%.
2. Military Levy by Legal Entities: 1% of income for corporate tax and uniform tax payers of groups III and IV.
3. Military Levy for Single Tax Payers:
   • 5% of the rate of two minimum wages per month for groups I, II, and IV.
   • 1% of income for FOP of group III.
4. Military Levy on Transactions:
   • 5% on bank metals (gold, silver).
   • 30% on jewelry sales.
   • 15% on new passenger cars.
   • 5% on real estate sales by individuals who have already sold one property in a tax year.
5. Mobile Services: 5% military tax on the value of services paid by end-users.
6. Retail Fuel Trade: Monthly advance payment of 0.5 minimum wage per cubic meter of fuel storage capacity.
7. International Parcels: Lowering the tax threshold to shipments costing less than 45 euros.
8. Excise Tax on Sweet Water: 0.1 euro per 100 grams of sugar per liter.

Financial Requirements and Budget Allocations:

• Current and Projected Needs:
  • Ministry of Defense's financing request: 17 trillion UAH.
  • State Budget for 2024: 1.69 trillion UAH for security and defense.
  • Additional 500 billion UAH approved by the government in July.
  • Expected 140 billion UAH from proposed tax increases.

Expert Opinions and Recommendations:

• Economic Reforms:
  • Experts stress the need for economic reforms and detinization to increase budget revenues.
  • Suggested reforms include:
    • Customs reform.
    • Tax service reform.
    • Overhaul of the system blocking tax invoices.
• Potential Impact of Reforms:
  • Reforms could yield from 400 billion to 1 trillion UAH, exceeding the planned tax increase.

Conclusion

The Ukrainian government is faced with the enormous financial burden of the ongoing war, necessitating tax increases to fund military expenses. However, experts argue that comprehensive economic reforms would yield more significant and sustainable financial benefits, supporting long-term economic stability and growth.