Zelensky signed the law on the redirection of the “military personal income tax”. Why is this important?

President Volodymyr Zelenskyi signed the draft law No. 10037 on the "military personal income tax". Therefore, the state budget will receive 214.7 billion hryvnias for military expenses from the redirection of personal income tax.

From October 1 to December 31, 2023 the "military personal income tax"; will be directed to the state budget in a ratio of 50% to 50%: State Special Communications for drones (13 billion) and the Ministry of Defense for the purchase of artillery systems (13 billion).

From January 1 to December 31 of the year in which martial law will be suspended or abolished, the "military personal income tax" shall be distributed in the following proportions:

• 45% — State Special Communications for drones (forecast 43+ billion hryvnias);
• 45% — to the Ministry of Strategic Industries of Ukraine for the production of ammunition and weapons (43+ billion);
• 10% — to military units on the ground (about 10 billion).

What is interesting about the "military personal income tax"

In the first seven months of 2022, the maintenance of military personnel was the largest item of expenditure — 520 billion hryvnias, or a third of all state expenditures since the beginning of the year. Since the military also pays taxes on the income received, in particular personal income tax, the corresponding charges have increased very sharply and in a large amount.

Currently, income from personal income tax is distributed between the state and local budgets: 64% goes to community budgets, 15% to regional budgets, and the rest to the state budget.

During the war, the "military personal income tax" became an important source of filling local budgets — the incomes of communities increased eightfold. In 2023, the projected amount of revenues from the "military personal income tax" is expected to be 96 billion hryvnias. For comparison: in 2021, it was at the level of 12 billion hryvnias.

"Super incomes" were received by those communities on the territory of which military units or training centers are registered. That is, different communities can have radically different incomes, and not all of them "rationally" arrange a large income.