Hetmantsev: “Raising taxes retroactively is a proper violation of the Constitution”
15 October 2024 09:27
on 10 October, the Verkhovna Rada of Ukraine passed a law that significantly increases taxes for citizens, with some aspects being retroactive. Thus, for individual entrepreneurs, this increase will start on 1 October, despite the fact that the law has not yet been signed by the President and published as of 15 October. One of the authors of the legislative amendments, Danylo Hetmantsev, chairman of the Verkhovna Rada ‘s tax committee, claims that this is a “correct” violation of the Constitution, as it is supposedly for the common good. He said this in an interview with Ekonomichna Pravda, according to "Komersant Ukrainian"
The MP claims that without the violation of the Constitution, taxes would have had to be raised even more. Therefore, the basic law was violated in the interests of citizens.
“In September-October, we were faced with a dilemma: either enact the law in November and raise rates even more (because the amount of need is not going anywhere) or do it on the first of October. So, out of these two very, very bad decisions, we chose the one that seemed less bad… Only exceptional circumstances forced us to make this decision,”
– said the MP.
He added that the law will violate the Constitution only “in the part of individual entrepreneurs”. For other citizens, taxes will increase from the moment the law comes into force.
However, Doctor of Law Hetmantsev sees certain legal aspects that allow him to justify this approach. According to him, although the law violates the Constitution, it is constitutional.
“But if we remove the question of constitutionality or unconstitutionality, the law is constitutional. There is a decision by which the Constitutional Court interpreted what retroactive effect means. And he noted that this applies to cases where the rules regulate relations that began and were completed before the date the rule came into force,”
– and the relationship of individual entrepreneurs with the state budget, he argues, is just stretched over time and is not quite complete at the time of adoption of the rule.
“If we are talking about the third or fourth quarter, the relationship is definitely not complete… We understand that individual entrepreneurs have quarterly reporting. For the fourth quarter, they will submit it at the beginning of next year and will pay the new tax only then…. But really, this is a bad decision. That is, we have no discussion here,”
– says Getmantsev.
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When asked about the practical application of the new rules, in particular regarding the taxation of salaries that have already been partially paid, Getmantsev said that the second part of the salary will be taxed at the new rate.
In general, the author of the draft law suggests not focusing on the violation of the Constitution, but rather being satisfied with the fact that raising taxes is a correct and timely decision.
“But this decision is inherently correct. If there is no money for the army, where should it be taken? It should be taken from people, distributing this tax equally among everyone. It seems to me that any discussions on this topic that we have heard in the parliamentary hall, on social media or from pseudo-experts that we should not raise taxes discredit us as a country,”
– hetmantsev summed up.
The provisions of the draft law on tax increases:
- for everyone except military personnel, the military tax increases from 1.5% to 5% of income;
- for private entrepreneurs of the third group, the military tax is set at 1% of income;
- taxes for the 1st and 2nd groups of individual entrepreneurs are increased;
- banks are expected to pay 50% of this year’s profit;
- the MPZ for land is increased;
- 25% income tax for financial companies;
- monthly PIT reporting is introduced (starting from January 2025);
- rent for the extraction of crushed stone is increased;
- cashback is exempt from taxation.
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