On October 9, representatives of Ukraine’s leading economic think tanks (including CASE Ukraine) met with Priscilla Toffano, the Resident Representative of the International Monetary Fund in Ukraine, with the assistance of CIPE Ukraine.
The meeting’s purpose was to exchange views between Ms. Toffano, the IMF’s Resident Representative in Ukraine, and Ukrainian economic think tanks on the country’s current economic situation and critical challenges facing Ukraine in 2024-2025.
Representatives of the economic expert community shared with the IMF specialist their vision of this year’s risks, possible sources of budget deficit coverage, and priority institutional changes.
Experts from think tanks shared their joint assessment of the Cabinet of Ministers’ draft law on tax increases and introducing new taxes. In their opinion, draft law No. 11416d still contains one harmful provision—raising the military tax to 5%—while there is a less harmful solution for the economy—raising VAT by several percentage points. According to OECD research, direct taxes are the most detrimental to economies; indirect taxes are less harmful, and real estate and land taxes are even less dangerous.
During the meeting, think tank experts emphasized the importance of rebooting the Customs and Tax Service with the election of its management by commissions of international experts—draft laws No. 6490d (still not signed by the President) and No. 9243. They thanked the IMF representatives for facilitating the reboot of the Bureau of Economic Security with the decisive vote of international experts.
The Government’s measures to introduce performance criteria for the Tax and Customs Services, assess their work by analyzing tax gaps, conduct electronic tax audits, and implement effective anti-corruption measures have not been implemented for a long time.
As a result, due to the ineffective work of these services, the state loses about UAH 300 billion a year, in particular, due to gray imports and smuggling (UAH 120-150 billion a year), shadow schemes for the sale of excisable goods (UAH 40-45 billion), payment of wages in envelopes (UAH 70-100 billion), etc.
During the discussion, representatives of the Ukrainian economic community also noted the importance of exchanging customs information with other countries, the need to introduce labor relations criteria in legislation to minimize the “sole proprietorship instead of hiring” scheme, and the importance of large-scale deregulation.
The panelists discussed the economic sentiment of business, the obstacles faced by entrepreneurs in wartime and ways to overcome them, as andy industries that are a source of revenue for the country’s budget and have the potential for growth.
The IMF mission chief emphasized the importance of such meetings and the exchange of ideas and stressed the criticality of continuing efforts to de-shadow Ukraine’s economy.
The participants agreed to continue further systematic communication on issues relevant to the country’s economy after the discussion.