Is it possible to reduce VAT on social goods: expert opinion
Recently, there has been active discussion in Ukrainian society regarding the initiative of Kharkiv Mayor Ihor Terekhov to reduce value-added tax (VAT) on socially important goods. The goal of this proposal is to make essential products more affordable for citizens who have suffered from the consequences of the war and economic instability.
Economic experts note that the idea looks attractive to consumers, as a tax reduction could lead to lower prices on store shelves. However, specialists warn of serious risks to the state budget. A decrease in tax revenues could limit the state's ability to fund the defense sector, which is critically important under the conditions of a full-scale invasion.
Furthermore, analysts point to the complexity of administering such a process. If VAT is reduced only for specific categories of goods, it could create conditions for abuse and corrupt schemes. Businesses would have to spend additional resources on maintaining separate accounting, which could negatively impact the final cost of products.
Currently, government officials and representatives of tax authorities have not provided official support for this initiative. Most experts lean toward the opinion that instead of changing tax rates, the state should focus on targeted assistance to the most vulnerable segments of the population. This would allow for supporting people without creating holes in the state budget.
Thus, the issue of reducing VAT remains a subject of debate. For now, the economic feasibility of such a step raises many doubts in the professional community. It is expected that in the near future, the government will continue to seek other ways to curb inflation and support the purchasing power of Ukrainians.