The Ministry of Finance believes that a military tax of 15% of the cost of a vehicle upon its first registration will not create problems for buyers or the car market as a whole, and that law enforcement agencies will be able to combat the shadowing of the market that critics predict.
“We have a security problem, a house is burning, and you say that we don’t need to buy fire extinguishing equipment, but rather buy a car. No problem, buy a new car, but also support the Armed Forces,” Finance Minister Sergei Marchenko said in an interview RBC Ukraine.
He added that buying a car in a country at war is not yet “a critical need”:
“Buying a car is not a pressing critical need right now. And for the security and defense sector, cars are imported duty-free and without paying VAT.”
According to the draft law, which the Cabinet of Ministers submitted to the Verkhovna Rada on July 18, it is envisaged to increase tax revenues to 140 billion hryvnias by increasing the military tax rate to 5% (currently 1.5%) and obliging private entrepreneurs of the third group to pay 1% of the tax, as well as by revising the amount of excise taxes and applying a military tax of 15% upon the first registration of a passenger car.
Earlier, the Chairman of the Budget Committee of the Verkhovna Rada Roksolana Pidlasa statedthat if taxes are not raised, the military risks being left without support as early as the end of September.
Meanwhile, Marchenko recalled that Ukraine spends 166 billion hryvnias monthly on the security and defense sector, and an average of 5.6 billion hryvnias daily.
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