On 3 September 2024, the 12th session of the Verkhovna Rada of Ukraine of the 9th convocation began its work. On the same day, the Parliament adopted the agenda of the session.
In general, the Parliament’s agenda is a list of draft laws that MPs are to consider in the session hall. Basically, it is a plan of work for the Verkhovna Rada, which allows MPs to review draft laws and the public and international partners to monitor what and when the Verkhovna Rada is to vote.
In this text, we decided to highlight the most high-profile legislative initiatives, both from a political and public standpoint, that the Ukrainian parliament should or may consider in the next couple of months in the session hall. The reference point was based on both the agenda and the demands of Ukraine’s international partners, as well as MPs’ statements in their communications with the media regarding the possible adoption of certain laws in the near future.
However, as ALI previously wrote, the parliament’s agenda in Ukraine has ceased to be an effective work plan.
Selected draft laws touch on the most sensitive areas facing the Ukrainian state: national security and economy and reforms on the path to EU integration.
Tax hikes: Implementation
Amid the discussion on the economic reservation and the shaping of the state budget for the next year, the adoption of the equally important draft law No. 11416-d, which provides for significant tax hikes, continues.
On 17 September, the parliament passed the document, which had been recently approved by the VRU Committee on Finance and Customs Policy, in the first reading with 241 votes in favour.
Back in May of this year, Danylo Hetmantsev, Chair of the VRU Committee on Finance, said that the government planned to raise certain taxes to fill the budget in order to finance the Armed Forces of Ukraine. Already on 18 July, the Government approved the law on amendments to the state budget, and at the end of the month, Ruslan Stefanchuk, Speaker of the Verkhovna Rada, confirmed the parliament’s intention to adopt the tax hikes.
The draft law was amended several times by the end of August and voted down on 3 September this year.
At the same time, as part of the review of the cooperation programme, the IMF Mission in Ukraine called on the Ukrainian authorities to raise taxes to generate additional budget revenues to cover rising expenditures amid the fighting, which will continue next year.
Yaroslav Zhelezniak, Deputy Chair of the VRU Committee on Tax Policy, called the draft law adopted in the first reading a “historically large” tax increase: by UAH 58 billion this year and UAH 137 billion next year.
Changes proposed by the draft law include:
- increasing the military tax from 1.5% to 5%;
- increasing taxes for individual entrepreneurs of groups 1 and 2;
- setting the corporate income tax rate for banks at 50% for 2024 (although the Ministry of Finance is against this innovation).
According to Zhelezniak, the draft law will not be adopted in its entirety by the beginning of next month, so it will take effect retroactively from 1 October this year.
Economic reservation: Draft
At the same time, a draft law on economic reservation is being discussed no less actively, including in the context of mobilisation. Draft law No. 11331 and related documents outlining the concept of economic reservation are on the agenda of this session of parliament.
The authors of the draft laws explain the need for its adoption by creating a clear and understandable reservation system and increasing the state budget’s revenues because, as officials of the Ministry of Finance have said, “all the resources that the state can raise in its own economy are used to finance security and military needs.”
This idea has been discussed for a long time and has become the subject of active debate, accusations and controversy: from the possibility of “paying off” for the rich to the inevitability of such measures given the difficult situation with the financing of the Armed Forces of Ukraine.
Since Ukraine’s Western partners have banned the use of financial assistance to fund military needs, the government has to look for these funds within the Ukrainian economy.
The draft law raises the most questions and complaints from business representatives, as the staff shortage caused by mobilisation is a major problem for almost 60% of employers. A survey by the American Chamber of Commerce in Ukraine showed that 8 out of 10 companies Which are the member companies of the Сhamber. had experienced the impact of mobilisation.
Representatives of business associations also call for making the rules of economic reservation clear and stable and avoiding regular changes to them. They insist that the system that the parliament is planning to support should be in addition to the existing reservation of employees of state-critical companies, as the cancellation of the old mechanism regulated by government resolutions in favour of the new one could halt critical production processes. There are also calls for reserving managers of important companies without regard to the quota.
It is worth adding that three models of such reservation – parliamentary, governmental, and mixed – are currently under consideration. The media have described in detail the principles by which the future system could operate.
The VRU Committee on National Security also expressed cautious support for the draft law. Its chair, Oleksandr Zavitnevych, said in the summer that the parliament would seek a balance between the front and the rear. On the other hand, the reservation system itself seems unfair and sensitive to those Ukrainians who have been serving in the Armed Forces for the third year of the full-scale invasion.
In addition, according to Roksolana Pidlasa, Head of the VRU Committee on Budget, UAH 322 billion Without taking into account the costs of weapons and equipment. is needed to mobilise up to 500,000 people, while the adopted draft law may bring in a smaller amount The Chairman of the Committee on Economic Development of the Verkhovna Rada, Dmytro Natalukha, in an interview with the mass media, called UAH 200 billion. .
Officials or parliaments have not made clear statements on the timing of the draft law’s adoption, although at a meeting of the VRU Committee on Financial Policy held on 29 August, a representative of the Ministry of Economy suggested that the system could be launched in October – November.
In late August, Denys Shmyhal, Prime Minister of Ukraine, announced the government’s intention to update the “fight or work” reservation procedure for businesses.
In turn, First Deputy Prime Minister and Minister of Economy Yuliia Svyrydenko added that the issue of economic reservation would be revisited as soon as the military command informed that the balance of mobilisation was not disturbed.
Budget 2025: Draft
On the evening of 13 September this year, the Cabinet of Ministers of Ukraine approved the draft State Budget for 2025. It was registered in the Verkhovna Rada already on 14 September.
Next year, the government expects a reduction in unemployment, an increase in average wages, inflation of 9.5% Higher than the indicator of the current year, which is 7.9%. , GDP growth of 2,7% In 2024, this indicator is 3.5%, and an average annual exchange rate of UAH 45 per USD 1. Moreover, the main social indicators We are talking about the minimum wage, categories of living wage, etc. remained unchanged.
According to the draft budget, its revenues will increase next year. When calculating the budget, the government likely considered the previously voted tax increase draft law. A significant increase in revenues from the National Bank of Ukraine is also expected.
However, after the draft was published, Minister of Economy Yuliia Svyrydenko said that revenues from the economic reservation were not included in the 2025 budget. Furthermore, Danylo Hetmantsev, Chair of the Parliamentary Committee on Finance, believes that such revenues were included in the draft.
The deficit in 2025 is expected to reach 19.4% of GDP, and it is planned to be covered mainly from external sources, primarily from Ukraine’s Western allies.
It should be added that the draft budget itself will change significantly before it is adopted by the parliament. So far, parliamentarians and ministry officials have not given any clear timeline for the budget’s adoption, but based on the adoption of the previous two budgets during the full-scale war, it can be expected in early November, as the VRU adopted budgets for 2023 and 2024 on 3 and 9 November, respectively.
Demobilisation: Idea
One of the most sensitive draft laws to be passed by the Ukrainian parliament concerns demobilisation.
In the spring of this year, provisions on the dismissal of military personnel from service were removed from the adopted draft law No. 10449, or the so-called “mobilisation law”. A few days later, the Ministry of Defence of Ukraine announced that a draft law on demobilisation was under development.
At the same time, it was stated that the 8-month submission deadline had been removed, as it could happen sooner.
On 18 June, after a meeting of the VRU Committee on National Security and representatives of the Ministry of Defence and the General Staff of the Armed Forces of Ukraine, it was stated that if the pace of mobilisation was maintained, the relevant draft law could be registered in October. The same was said to journalists by Roman Kostenko, Secretary of the VRU Committee, and Iryna Friz, Committee Member. According to Kostenko, one of the conditions for introducing the draft law on demobilisation is that the pace of mobilisation We are talking about the situation as of June of the current year. should be maintained until the end of this summer.
In late July, the Ministry of Defence confirmed that the document was under development but did not provide specific registration dates or the possibility of its adoption by the parliament.
The VRU Committee on National Security did not discuss demobilisation at its meetings in July and August The last meeting of the committee at the time of writing was held on August 29. . Currently, no draft laws related to demobilisation are on the agenda of the 12th session of the parliament, and no new public statements have been made recently.
Conclusions
In the context of a full-scale Russian invasion, all these decisions are interconnected and complex, either from an economic or a social point of view. However, some of them have not yet been implemented when it comes to demobilisation.
On the other hand, it is worth recognising that the demobilisation process depends on the process of mobilising people into the army and the dynamic security situation.
At the same time, MPs have maintained the rhythm established since the beginning of the full-scale Russian invasion in terms of adopting draft laws related to the state’s economic policy and budget planning amid increasingly difficult economic and security challenges facing the state.
