Personal Income Tax and Military Fee: Challenges, Efficiency and Impact on Financial Stability
Authors:   Vasyl’ Stus Donetsk National University, Yuzdepska Angelina A. , Nikolaeva Anastasia P. ,   Vasyl’ Stus Donetsk National University, Yurchyshena Liudmyla V. ,   Vasyl’ Stus Donetsk National University
Published: February 2025

The article considers personal income tax and military fee as important elements of the financial system of Ukraine, which ensure the stability of the budget at the State and local levels. Particular attention is paid to their impact on the economic stability of the State in the face of modern challenges, in particular in view of the protracted full-scale war. The study is aimed at analyzing such challenges related to the administration of these taxes as increasing transparency in the use of funds, reducing the tax burden and minimizing tax evasion. Personal income tax is one of the key budget-forming taxes, which provides a significant part of State revenues. It is levied on citizens’ incomes and is used to finance the basic needs of the country. The military fee, in turn, is a targeted tax designed to support the defense capability of the State. Both taxation instruments demonstrate the importance of efficient public finance management, which becomes especially relevant in the context of socioeconomic changes and increased burden on the State budget. The article highlights the impact of these taxes on ensuring the financial viability of local budgets, which play an important role in solving regional problems. In particular, income from personal income tax is used to finance local infrastructure, social programs, health care and education. This underscores the importance of fiscal decentralization, which helps to strengthen the autonomy of local authorities. An important aspect of the study is the analysis of the challenges associated with the military fee, including the issue of its legal status in the country’s tax system. It is noted that this fee is a targeted payment that does not provide direct benefits for taxpayers, but is of strategic importance for meeting defense needs. The article also discusses the problems that arise in the process of expanding the tax base with the military fee and introducing new rates for different categories of taxpayers. The study highlights the importance of transparency in the use of the funds raised, which will help to strengthen trust in the tax system. The article emphasizes that the optimization of the processes of administering personal income tax and military fee will allow for more efficient use of available resources to meet the needs of the State and society. The conclusions emphasize the need to improve the tax system by introducing new tools that will increase the efficiency of tax management. In particular, it is recommended to focus on the development of mechanisms to ensure the targeted use of funds, improve the administration of tax revenues and stimulate economic activity. Thus, the article highlights the important role of personal income tax and military fee in ensuring Ukraine’s financial stability and forming the foundations for sustainable economic development. Improving these tax instruments will ensure the long-term sustainability of the State budget and create conditions for more efficient meeting of the needs of society.