Kyiv remains with a significant surplus, even after the removal of the “military” personal income tax – an expert

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Kyiv will have a lot of extra money, even after the “military personal income tax” is withdrawn.

About this stated senior economist of the Center for Economic Strategy, Yuriy Gaidai, during the discussion on draft law No. 10037, which provides for the redistribution of “military” personal income tax from the local to the state budget (it was adopted in the second reading on November 8, – ed.).

“Kyiv remains with a significant surplus, even with the removal of personal income tax. This is evidenced by the data for 9 months of 2023,” Gaidai emphasized.

According to the expert, among the top 20 surplus budgets, the majority of the surplus at the local level is generated by Kyiv, despite the fact that it has a smaller share of personal income tax in the distribution and does not have a reverse subsidy.

In addition, the budgets of Kyiv region, Odesa, Mariupol (due to a significant decrease in expenditures and preservation of income from several large payers) and Kharkiv are significantly surplus.

At the same time, the expert emphasized that in the context of individual spending programs of local budgets, one can see programs that are difficult to classify as top priorities during the war. As well as those that show a generally abnormal increase in expenses.

“This is also the organization of the development of populated areas, according to which, compared to eight months of the corresponding year, we have 45% in nominal terms until 2021. Expenditures for the maintenance and development of highways are financed from the local budget, because there are separate expenditures from the state budget. Likewise we can see a significant increase in contributions to the authorized capital of business entities. In 9 months, there is definitely more than there was in 2021 in nominal terms. And there is an increase compared to the previous year, too,” Yurii Gaidai emphasized.

According to the expert, according to the comments of some representatives of local self-government bodies, they explain the increase in expenditure on improvement programs and contributions of funds of sufficient capital by the fact that there is a need to redirect funds from capital expenditure programs, for which payments are limited.

“However, there is probably a certain inefficiency of the budget policy regarding the determination of permissible expenditures of local budgets and regarding the implementation of control,” he noted.

We remind you:

On November 8, after the adoption by the Verkhovna Rada of draft law No. 10037, according to which the military personal income tax will now be directed to the state budget, Kyiv Mayor Vitaly Klitschko said that now Kyiv has nothing to help the Armed Forces.

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