Ukrainian citizens will have to choose between being drafted into the army or working and paying all their taxes, Prime Minister Denis Shmigal has said. The government needs to rely more on its own resources to cover its military expenses, he explained.
Kiev has been relying on foreign aid to cover its budget, but state finances are in poor shape nevertheless. Last month, Fitch Ratings declared the country in a state of “restricted default” after Ukraine failed to repay bonds to private creditors amid tense talks on restructuring the debt.
Shmigal highlighted the government’s struggle to fill its coffers during the ‘Ukraine 2024. Independence’ forum in Kiev on Tuesday. Among other things, “we are introducing the principle ‘Either fight or work’, which provides for a number of measures to bring the labor market out of the shadows,” he told the audience.
”This point is important for increasing the number of jobs and raising average wages in various industries to generate revenues for the budget,” the prime minister added.
The Ukrainian labor market has been hit by new mobilization rules, which the government introduced earlier this year to bolster the ranks of the military, MP Dmitry Natalukha told Financial Times earlier this month. He has advocated for a reform that would allow employers to protect 50% of their workers from being mobilized by making monthly payments to the state.
Natalukha estimates that some 800,000 Ukrainian men have “gone underground” for the purpose of avoiding the draft. Many are participating in the workforce without declaring their employment – which means their wages generate no taxes and do not draw unwanted attention from conscription officers.
Other ways in which Shmigal’s government intends to cover expenses include borrowing on the domestic market, taxing banks, hiking the tax rate and widening the scope of the so-called “military levy” – a special revenue tax collected from both citizens and businesses. All those policies will help Kiev procure more arms and pay its troops, the prime minister said.