“7% of salary on bonds”: how Kiev residents react to the proposal of the head of the tax committee

The proposal of the chairman of the tax committee of the Verkhovna Rada of Ukraine that 7% of the salary of Ukrainians should be automatically allocated for the purchase of domestic government loan bonds (government bonds) caused outrage and distrust among Kiev residents. During a survey conducted by UNN on the streets of Kiev, residents of the capital expressed their attitude to this initiative.

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Under the pretext of the need to increase funding for the army, the chairman of the Verkhovna Rada Committee on finance, tax and customs policy, Daniil Hetmantsev, who was repeatedly the initiator of the tax increase in Ukraine, proposed to oblige working Ukrainians to buy government bonds for 7% of their salary.

The majority of respondents sharply condemned Getmantsev’s idea, considering it unfair, especially in war conditions, when the financial situation of citizens is already difficult.

• ” very negative, Very “ – one of the respondents briefly put it.
• ” Why 7 and not 70? You understand me “ – ironically commented another participant in the survey.
• “ during the war, it is, of course, unprincipled to impose any taxes on people who already have no funds,” added one of the Kiev women.

Some believe that before introducing taxes for citizens, it is worth paying attention to the expenses of the state apparatus. Kiev residents also drew attention to the problems associated with corruption and high incomes of people’s deputies.

• ” let the deputies and other officials return the money they stole. They will be enough for the war and for everything else,” the man said.
• ” all these politicians live on a different planet, they live parallel lives. They probably don’t get out of these rough cars, because ordinary people would beat their faces”, ” another resident of Kiev said emotionally.

Some survey participants drew attention to the lack of economic justification for the initiative and suggested looking for other ways to solve financial problems.

” I believe that it is possible to develop some programs. Reforms-you understand for yourself that they are not being developed for a week or two, perhaps you need to find good economists? International ones that can somehow contribute, “ suggested one of the respondents.

Some of the respondents expressed the opinion that such an initiative will hit the most vulnerable categories of citizens, while people with large incomes will be ignored.

• ” is it the military that should pay taxes or the workers? Their salaries are already small”, – said the Kiev resident.
• ” people don’t even have money for themselves, and then they can also take it away for taxes, “the man added.

When asked what could help Ukraine in the current conditions, Kiev residents offered various options, including attracting international specialists, implementing systemic reforms and reducing the costs of officials.

Thus the survey showed that the initiative on the obligation of the working population to buy 7% of the salary of government bonds does not find support among citizens. Kiev residents note the need for more transparent management of public finances, reducing corruption and finding alternative sources of financing.

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Earlier, Miroslav Laba, an expert on tax and regulatory policy of the economic expert platform, associate expert of CASE Ukraine, in an interview UNN noted that additional costs in the form of mandatory purchase of government bonds can create an additional financial burden for the population, especially for low-income citizens and entrepreneurs, and called for considering alternative ways to finance state needs. Laba suggested focusing on the fight against the shadow economy and tax debts, instead of introducing new mandatory spending for citizens.

Vitaliy Shapran, a member of the Ukrainian society of financial analysts, also sharply criticized Getmantsev’s idea of introducing mandatory purchases of Government Bonds by the working population. According to the financial analyst, the introduction of such an obligation will lead to the fact that the number of Ukrainian citizens leaving the country will increase.

“Another idea of Getmantsev (a student of Volodymyr Sivkovych) to force Ukrainians to buy government bonds for 7% of their income indicates that Danylo either has an acute mental disorder with an obsession to bite something off the income of Ukrainians, or a clear task from the center from the FSB and co.constantly embarrass Ukrainians with new ideas, indirectly agitating economically active citizens to leave Ukraine,” Shapran wrote on his Facebook page.

According to him, the forced obligation to buy domestic government loan bonds on the secondary market may lead to a number of negative consequences for the Ukrainian economy. Saturation of the market with bonds purchased by the population under pressure will inevitably lead to an increase in the yield of government bonds in the secondary market, because many citizens will try to get rid of these assets. This, in turn, will force the Ministry of finance to raise interest rates for new bond issues on the primary market, which will increase the cost of servicing public debt and become an additional financial burden on the budget.

In addition, Getmantsev’s proposal, according to Shapran, does not take into account the high costs of administration and opening securities accounts, which is not an easy task for the banking system. In particular, the cost of opening and maintaining accounts for operations with government bonds may exceed the return on such investments for citizens with average incomes. 

The financial analyst also believes that such an initiative will actually encourage the transition to shadow salaries and minimizing official payments, because the mandatory percentage of income on government bonds can be perceived as an additional tax.

“Ukraine is a country with a market economy, and such coercion can hardly be called market coercion. Managers should prove the profitability of operations by their own example. Mr. Getmantsev’s annual declaration does not show that he or his family members are buyers of government bonds. On the contrary, I see a lot of foreign currency deposits and foreign currency cash. Therefore, it is strange to hear him talk about forced government bonds, especially since such reflections indicate that he has no idea how the government bond market works in Ukraine. And he, as the chairman of the Finance Committee of the Verkhovna Rada, should know this, at least at the end of his cadence,” Shapran added.

He called on the president of Ukraine and the chairman of the Verkhovna Rada to immediately remove Getmantsev from the post of chairman of the tax committee of the Rada and “send him for compulsory psychiatric examination.” 

“The people should still know: Hetmantsev is just a fool without an economic education, who has no one to stop, or a traitor who throws firewood into the Ukrainian economic crisis. In any case, Getmantsev’s professional influence on the Ukrainian financial sector should be eliminated, preferably yesterday,” the financial analyst stressed.