State budget revenues growth by 0.5% of GDP in 2024 included in program with IMF achievable, but anything more to require radical decisions – Hetmantsev
Discussions about the sources of increasing the state budget for 2024 continue; receiving an additional 0.5% of the projected GDP looks realistic, as is included in the program with the International Monetary Fund (IMF), while attracting large volumes for the stated indicative needs of the Ministry of Defense will require radical solutions, the head of the parliamentary committee on finance, tax and customs policy, Danylo Hetmantsev, said.
"The Ministry of Finance is coming up with an idea about [increasing] the war tax for certain operations. For example, cellular communications, purchase and sale of vehicles. But let's wait for the final proposals. I don't see much potential there. The maximum potential that I see is is UAH 40 billion that the IMF tells us about," he said in an interview with Interfax-Ukraine.
"But if they want something more, they will offer us more radical solutions," the head of the Verkhovna Rada's financial committee added, clarifying that the committee is currently awaiting final assessments and proposals from the Ministry of Finance and the Cabinet of Ministers.
According to the Memorandum of Economic and Financial Policies, Ukraine shall prepare measures to mobilize at least an additional 0.5% of GDP into the 2024 state budget by the end of February (based on the projected GDP of UAH 37.3 billion), although Head of the Rada Budget Committee Roksolana Pidlasa announced declared additional expenses of about UAH 720 billion by the Ministry of Defense.
Hetmantsev said that UAH 720 billion is the estimated cost of mobilization in the previously announced parameters, because the final calculations for mobilization are not yet known. According to him, the corresponding bill is still under consideration, and the Supreme Commander-in-Chief has publicly voiced questions about the real scale of the necessary mobilization, which will be clarified by the new leadership of the Armed Forces of Ukraine, so the announced calculations are still an approximate figure for understanding the overall scale of the problem.
"If we are talking about the first amount [0.5% of GDP], this is not such a large amount of money. I don't want to run ahead of the train now and voice specific areas that still need to be discussed with the IMF, but we have an understanding of where to get them. If we talk about the second figure, namely the potential needs for funds for additional mobilization, yes, this is a lot of money, and where to get it is a big question," the head of the committee said.
He emphasized that in the discussion about additional sources of income, confirmed income should be distinguished from probable income from removing business from the shadow.
"In the context of the invention of additional sources, we are talking exclusively about income that is confirmed. That is, if we make a decision, then the budget will definitely receive these incomes. De-shadowing is impossible to calculate, although in fact the easiest way would be to write that the budget will receive UAH 100 billion from the elimination of smuggling. But these are not exact receipts," Hetmantsev said.
He recalled that for 2023, the excise tax plan on the tobacco market was exceeded by 13%, although, according to his estimates, there is a revenue potential of UAH 20 billion of reserve funds.
"In our opinion, we have brought the gambling business out of the shadows to a large extent. We received UAH 10.4 billion (in 2022 only UAH 740 million), we see an increase there of around 10% for 2024, but we don't see insane potential – we have already exhausted it in 2023," the head of the committee added.
Hetmantsev said that ideas about abolishing benefits were also discussed, in particular, it is proposed to abolish reduction factors for radio frequency resources. "However, this is only up to UAH 300 million per year. There is also a zero VAT rate for enterprises of organizations of people with disabilities, which, by and large, has turned into a corruption loophole and the business of several families. We intend to remove this. But there is no significant potential there either," he said.
At the same time, the head of the committee opposes additional taxation of non-critical imports, since, in his opinion, it is fraught with a destructive impact on the economy.
"In fact, the overwhelming number of imported goods are goods that are necessary for our production. When you talk about import duties, the question always arises of a list of critical import goods that should not be taxed," he said.
"We already went through this in 2022, when the list of the initial 20 items for foreign exchange payments in March 2022 expanded to 90% of all goods in June. Indeed, there are some luxury goods on which this tax could be introduced, but the fiscal effect will be small," Hetmantsev added.
The chairman of the financial committee also said that he does not support additional payments to the budget for the possibility of reserving part of the workers by entrepreneurs, since he believes that this "undermines the very important principle of fair donation, which is a fundamental principle of a country that is at war."
"The property qualification is the worst qualification that can be applied in this context, because the poor will not and cannot fight for the rich," he said.