Think tanks pointed to the negative effects of tax proposals of the Cabinet

Ukrainian think tanks analyzed the government bill No. 11416, which provides for a tax increase of UAH 140 billion in 2024. They note that it contains a number of extremely negative norms that will cause significant damage to the domestic economy. This is stated in the post of Oleg Getman, coordinator of the Economic Expert Platform.

In particular, analysts believe that raising the rate of military duty from 1.5% to 5% will lead to further shadowing of wages and suppression of economic activity.

The establishment of the payment of military fees for legal entities in 1% of the income from any activity, analytical centers called the most negative proposal of the Ministry of Finance of all available. They believe that the turnover tax is extremely bad for the economy, distorts competition, discriminates against Ukrainian producers.

«It is proposed not to introduce new taxes, to solve the problem by temporarily raising the existing ones for a certain period. Instead of turnover tax, raise the VAT rate to a level that will allow you to receive these revenues, «experts note.

Regarding the establishment of the obligation to pay a military fee (15%) by enterprises, institutions and organizations, individuals who acquire ownership of passenger cars subject to the first state registration in Ukraine, it is noted that it is advisable to tax only expensive cars, from a certain threshold amount of customs value.

According to experts, it is extremely burdensome for the state and business to propose the Ministry of Finance to seek additional revenues by introducing new taxes, which provide for additional forms of reporting, the use of new administration and control procedures (military duty, turnover tax).

Analysts call the search for reserves a more rational solution due to an increase in the efficiency of the supervisory authorities, the destruction of tax evasion schemes, the automation of business processes and a temporary increase in the rates of already existing taxes.

At the same time, an important decision would be to reduce secondary expenditures of the state budget. A possible rational way out in the search for additional revenues could be an increase in the VAT rate by 4-5 pp.

Together with the implementation of temporary measures. think think tanks, urgent systemic changes are needed, which will give additional revenues to the state budget next year.

It is about the following:

• early implementation of institutional reforms to minimize «shadow schemes» and budget filling: reboot of customs and tax services by commissions with the predominant voice of international experts, establishment of effective CRI for BEB, DPS, VHI, annual assessment of losses from various taxes using the tax gap methodology;
• improving the administration of real estate tax using all its potential;
• maximum automation of processes tax administration processes.

Think tanks called on MPs and the Ministry of Finance to hold a professional discussion of all alternatives and determine the norms that are least harmful to the Ukrainian economy for further implementation.

As GMK Center reported earlier, the tax proposals of the Cabinet will lead to a lack of investment in Ukraine, said economic expert Daniil Monin.