Increase in defense spending, "military personal income tax" and support for internally displaced persons: MPs talked about changes in the state budget

As noted by People's Deputy "Servant of the Nation", Chairman of the Committee on Finance, Tax Policy and Customs of the Verkhovna Rada Danylo Hetmantsev, it is planned to increase the expenditure of the general fund of the 2023 budget by UAH 322 billion, of which UAH 302 billion will be spent on national security and defense.

“This is quite a lot of money, and total expenses in the 2023 budget will increase by as much as 18%. In fact, they result from the need to finance the Armed Forces. The lion's share of these expenses, almost all of these expenses, is increasing the financing of the Armed Forces," Hetmantsev noted.

He explained that we are talking about two related bills: the first is intended to maintain changes in the 2023 budget, and the second is to redistribute the so-called “military” personal income tax: a military tax on the income of natural persons, which is redistributed from local budgets to a special budget fund and is used for the production of drones and for the production of military equipment.

Increase in defense spending

Hetmantsew also noted that the increase in spending is planned through internal borrowing: non-tax revenues, in particular military bonds.

According to the people's deputy, the 2024 budget will also focus on increasing defense spending and redistributing the “military” personal income tax. In addition, all revenues for the road fund will also be transferred to the general budget fund.

In turn, the People's Deputy of the “Servant of the Nation” faction, Yaroslav Zheleznyak, noted that changes in the state budget will not bring benefits to the Ukrainian economy.

“There is nothing good about it. This means that our deficit will amount to a record UAH 2 trillion... And this is a forced action. If we could not make such changes, and for this the war must end with our victory, we certainly did not make them. But there is no such choice," he said.

Zheleznyak also added that some changes in the budget are necessary, but he opposed increasing the financing of the Economic Security Bureau (BEB) and increasing the salaries of the State Customs Service.

The head of the Budget Committee of the Verkhovna Rada of Ukraine, Roksolana Podlasa, noted that in addition to increasing military spending, several other large spending items were planned that do not relate to the needs of the military.

In particular, UAH 16.5 billion will be allocated to support internally displaced persons. Another almost UAH 6 billion will be allocated for renovation and reconstruction. In addition, it is proposed to allocate about one billion hryvnias to the Ministry of Foreign Affairs for opening embassies in ten countries of Africa and the Arabian Peninsula, as well as for representing Ukraine in disputes and courts against the Russian Federation.