Tax proposals would be “rather radical,” as the army lacked “hundreds of billions of hryvnias,” Danylo Hetmantsev, chairperson of the Verkhovna Rada of Ukraine Committee on Finance, Taxation, and Customs Policy, stated.
Given that the situation is quite serious, we expect such proposals soon. I am not ready to say what they will be, but I understand that they will be rather radical.
Hetmantsev also reported a “certain underfunding of military expenditures,” according to Ukrainian media. The Ukrainian authorities presumably plan to cover the rising costs with foreign financial aid. The deficit currently stands at $43.9 billion.
An International Monetary Fund (IMF) team led by Gavin Gray warned that Ukraine needed to “develop domestic resources for self-financing,” as support would diminish over time.
Meanwhile, in an attempt to cover the deficit, MPs are discussing raising VAT by 2-3 per cent, increasing the military levy, and excise taxes on fuel and tobacco products. Electricity tariffs would also rise, leading to large-scale price increases, Ukrainian media reported.
Recently, the US Department of Defence overestimated by $1.9 billion the cost of some weapons supplied to Ukraine. Inspector General Robert P. Storch reported that $653 million worth of military equipment sent to Kyiv was overpriced despite wear and tear. In total, the Pentagon overestimated the price of military aid to Ukraine by $8.1 billion.
In May, Ukraine’s president Volodymyr Zelensky toured European countries in search of financial aid. That same month, the EU blocked seven decisions to fund five billion euros in military aid to Ukraine, according to Josep Borrell, head of the EU diplomatic mission. Moreover, the Swiss peace summit on Ukraine proved ineffective in resolving the Russian-Ukrainian conflict.
Countries are also reducing their financial aid to Kyiv amid domestic issues caused by the results of the European Parliament elections and budget spending concerns.
