In order to ensure social justice, Ukraine needs to extend the progressive tax system for individuals, which now applies only two rates – 15% and 17%, according to Ukrainian President Viktor Yanukovych.
“The scale of the progressive tax should be extended on the basis of fundamental forecast-based estimates. In particular, it is appropriate to increase the number of the scale divisions, having raised the rate for the wealthiest citizens,” the presidential press service quoted him as saying while addressing tax officers on the occasion of their Professional Day.
“And what is most important is the need to introduce a reduced rate for low-income individuals,” he added.
As reported, Vice Premier and Social Policy Minister Sergiy Tigipko late in 2011 proposed a tax on wealth, which should introduce, among other things, a raised upper level of tax on individual incomes from 17% to 20%. Prime Minister Mykola Azarov has recently spoken out in favor of an increase in the upper level to 30-35%.
Ukraine had long used a five-division scale of income tax ranging from 10% to 40% depending on the sum of an income. In 2004 the country introduced a flat tax rate set at 13% for the first three years, and then it was raised to 15%.
The Tax Code from 2011 raised the tax rate for an income exceeding 15 minimum wages (around UAH 15,000 per month) to 17%. However, the sum of the income exceeding that amount is not subject to social insurance taxes reaching 37-38% in total.
