Ukrainian Finance Ministry on military levy: New car is not basic necessity

MOSCOW. Aug 9 (Interfax) - The need for a car can be satisfied by buying a used vehicle on the secondhand market while a new imported car is not a basic necessity in a military period, and therefore, a military levy should be imposed on such purchases, Ukrainian Deputy Finance Minister Svetlana Vorobei said.

"We're talking about taxing new and used imported cars and exemptions for the secondhand market. Purchasing a new imported car in a military period is not a basic necessity. If you need a means of transportation, you can buy a used car on the secondhand market. Therefore, by imposing a military levy on new imported cars, we can meet the military budget and stimulate the domestic auto manufacturer and repair market," Ukrainian media quoted Vorobei as saying in the ministry's press release.

Vorobei voiced this opinion at a meeting with automobile industry representatives on regulating the domestic auto market.

Ukraine's military expenses are covered by domestic revenues and borrowings, and all options for promptly meeting the military budget's extra needs without revising taxes have been exhausted, the press release said.

"Therefore, the Finance Ministry has proposed a number of measures to meet the defense forces' extra needs in the amount of UAH 500 billion in 2024. Three-quarters of said sum is to be provided through measures other than increasing taxes, and only one-quarter through revising the military levy, excise rates, and other tax payments, which should bring UAH 138.7 billion to the state budget by the end of 2024 and UAH 340 billion in 2025," the press release says.

As reported, the Ukrainian Verkhovna Rada on June 18 registered government bills on amending the 2024 state budget's security and defense expenditures, as well as the Tax Code and other bills concerning taxation during martial law. In particular, the latter provides for collecting 15% in a military levy from the buyers of automobiles during their initial registration, which, in the view of auto market experts, could cause sales to tumble and ruin whole chains of official car dealers.

On the other hand, European Business Association (EBA) members favor tougher measures to bring the economy out of the shadows instead of increasing some taxes and introducing new ones, as the bill proposes.