Free Economy Institute
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State revenues for a five-year perspective

State revenue calculations were performed for two basic development scenarios:

  1. 10% inflation and fixation of the national currency;
  2. Fading inflation with gradual appreciation.

The calculation is based on previously voiced estimates of GDP growth and economic development, as well as additional applied assessment methods:

  • Import, export and domestic trade grow in proportion to GDP growth.
  • Withdrawal of capital and personal money transfers in Ukraine remains at the level of 2016
  • Excise income increases in proportion to GDP growth.
  • NBU income, rental income, budgetary organizations revenues are gradually reduced in relation to GDP.

 

The calculation shows that a decrease in the level of the shadow economy disproportionately increases budget revenues. There is a decrease in the tax burden in both scenarios from 29.5 to 24% of GDP.

Despite such a low tax burden, due to GDP growth and the effective removal of the illegal economy from the shadows, budget revenues will exceed budget revenues in 4-5 years without reform.