According to the NBU, such initiatives may have different effects on inflation, depending on their parameters.
The updated macro forecast of the NBU takes into account the latest tax changes. However, the NBU does not rule out new tax initiatives, which, depending on the parameters, will have different effects on inflation.
This is stated in the Inflation Report of the National Bank of Ukraine (October 2024).
The assumptions of the macro forecast are based on the draft legislative amendments to increase the rates of certain taxes (including military tax, tax on the profits of banks and non-bank financial institutions, and others) and previously adopted changes to revise excise tax rates.
“However, if additional budget needs arise, the source of their coverage may be an increase in current rates or the introduction of new taxes,” the review says.
According to the NBU, such initiatives may have different impacts on inflation, depending on their parameters.
Thus, the potential growth of consumption taxes (including VAT) contains more short-term inflationary risks, since their increase will immediately affect consumer prices. Direct taxes have a mostly neutral effect, since the inflationary impact of large budget expenditures compensates for the restriction of private consumption, the NBU noted.
Let us recall that on October 10, the Verkhovna Rada adopted the bill on increasing taxes as a whole. In particular, for some Ukrainians, the military tax will increase from 1.5 to 5%. What and how much will each Ukrainian and business now pay for – read on ТСН.ua.
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