The final adoption of a bill raising taxes may negatively affect the economy: Businesses offer an alternative.

The current version of the draft law provides for an increase in the military tax from 1.5% to 5%, a 50% tax on bank profits in 2024, and 25% for non-bank financial institutions. The bill foresees additional revenue of ₴58B in 2024 and ₴137B in 2025.

However, business believes that the draft law’s adoption may lead to many negative consequences for the Ukrainian economy, in particular:

1. Reduction of economic activity
2. Increasing fiscal pressure on legal businesses
3. Growth in consumer prices
4. Reduction in consumer demand
5. Expansion of the shadow economy

Ukraine’s budget loses out on about ₴400B ($10B) a year from the shadow economy, which increases the current shortfall. Therefore, it is necessary to take the following additional measures: strengthening the fight against the shadow economy, introducing stricter control of state expenditures, reducing non-defense spending, and increasing the efficiency of the tax service.