package of measures designed to balance the country’s budget amid the ongoing conflict with Russia. The tax increase is expected to generate Hr 58 billion ($1.4 billion) in 2024 and Hr 137 billion ($3.3 billion) in 2025. This move comes as President Volodymyr Zelensky signed a law to increase the state budget by Hr 500 billion ($12 billion) to allocate more resources towards defense and military needs. The additional funding will be used to counter the large-scale armed aggression of the Russian Federation against Ukraine.
The majority of the $12 billion increase in the state budget will be financed through the issuing of domestic government bonds and by reducing expenses related to repaying the state debt. Additionally, Hr 30 billion ($722 million) will come from revenues generated by tax increases, while Hr 12.7 billion ($306 million) will be obtained from raising the excise duty on tobacco and fuel. These measures are aimed at providing the necessary resources to strengthen Ukraine’s defense capabilities and protect the country against external threats.
The draft state budget for 2025 includes a significant allocation of Hr 2.2 trillion for defense spending, which constitutes 26.3% of the projected gross domestic product (GDP). Prime Minister Denys Shmyhal emphasized the importance of investing in defense infrastructure to ensure the country’s security and sovereignty. The Ukrainian parliament approved the bill proposing tax increases as a means of generating additional revenue to address the growing financial demands of the ongoing conflict with Russia.
Despite the political challenges and public backlash associated with implementing tax hikes, Ukraine’s parliament voted in favor of the measure as a necessary step to secure adequate funding for the country’s defense and security needs. The decision to raise taxes reflects the government’s commitment to prioritizing national security and protecting the interests of the Ukrainian people in the face of external threats. By increasing revenue through taxation, Ukraine aims to strengthen its ability to counter aggression and safeguard its territorial integrity.
The tax increase represents a proactive approach by the Ukrainian government to address the financial strain of maintaining a large defense budget in the midst of a conflict with Russia. As tensions remain high in the region, Ukraine continues to prioritize military preparedness and invest in defense infrastructure to deter potential threats. The decision to raise taxes reflects the government’s determination to allocate sufficient resources for security and defense, despite the economic challenges posed by the ongoing conflict.
In conclusion, the approval of tax increases by Ukraine’s parliament signifies a strategic effort to bolster the country’s defense capabilities and address the financial demands of the conflict with Russia. By allocating additional funding to security and defense measures, Ukraine aims to safeguard its sovereignty and protect its people from external threats. The tax hike, combined with the increase in the state budget for defense purposes, demonstrates the government’s commitment to ensuring national security and resilience in the face of ongoing challenges.
