KYIV. July 24 (Interfax) - The protracted hostilities have used up the financial resources set aside to conduct the antiterrorist operation (ATO), thus undermining salary payouts to the Ukrainian military as early as from August 1, Ukrainian Finance Minister Oleksandr Shlapak said on Thursday.

"As of August 1, we'll have nothing to pay the military," he told parliament on Thursday while presenting draft amendments to the Tax Code (the bill N4309a) aimed to expand receipts into the national budget.

Further ATO requires 9 billion hryvni, while the state budget in general needs 31 billion hryvni: at least 9 billion hryvni for the military; 7 billion hryvni to rebuild the freed territories and tackle the problems of displaced persons; and 13 billion hryvni to cover national budget shortages caused by the worsening economic situation, the minister said.

The government has found the possibility to cut budget spending by 10 billion hryvni and proposes measures to increase revenues by 21 billion hryvni, the minister said.

However, the minister's appeal failed to find due response among parliamentarians: the proposal to introduce the bill N4309a on the agenda did not muster enough votes.

The amendments propose to increase the mining tax for producers of natural gas sold to industrial consumers from 17.5% to 70% of the maximum gas selling price, the finance minister said. To explain this proposal, Shlapak said that Ukrainian state companies produce over 15 billion cubic meters of gas which is sold to households at a regulated price of 362 hryvni, whereas private companies produce around 6 billion cubic meters and then sell to industrial consumers at a regulated price of 4,724 hryvni.

"It means that the fiscal burden on Ukrgasvydobuvannya (the Ukrainian state gas producer) reaches 94%, whereas the fiscal burden on private companies is 17.5%," Shlapak said.

The production cost of 1,000 cubic meters of Ukrainian natural gas is 242 hryvni, including 156 hryvni in amortization: the net profit from producing 1,000 cubic meters of natural gas for households is 47 hrynvi, profitability is 19%, the minister said.

At the same time, the minister estimated the net profit from selling of 1,000 cubic meters of natural gas for industrial uses at 3,654 hryvni, profitability at 1,500%.

The net profit from selling natural gas for industrial needs is 77 times the net profit from selling gas to households, the minister said.

"We calculated that since 2008 alone private companies have made 40 billion (hryvni) more in profit from Ukrainian gas production," he said.

The government also proposes to reintroduce the pre-2013 tax rate for oil and condensate production, i.e. to increase it from 39% to 56% of the price of per barrel for the Urals oil.

"The cost of oil production by Ukrnafta in the first quarter of 2014 stands at 885 hryvni