Economy

“Servants of the People” propose forced sale of bonds to the population: what is known

Danylo Hetmantsev, MP from the Servant of the People party and chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, has proposed to discuss the mandatory purchase of domestic government bonds by the population in the amount of 7% of taxable income. Hetmantsev wrote about this in his Telegram channel, Komersant ukrainskyi reports

In the context of martial law, Hetmantsev put forward the idea of compulsory placement of domestic government bonds among banks, legal entities and individuals.

“I think there is still potential for further increasing the volume of placements among banks, legal entities and individuals. Of course, stimulating the demand for domestic government bonds lies primarily in maintaining attractive rates on these instruments. The weighted average yield on hryvnia domestic government bonds issued in October was 15.6%. This is ahead of the projected devaluation and inflation. The investment attractiveness is even greater for households, given the absence of personal income taxation and military duty (unlike deposits),” Mr. Hetmantsev said.

According to him, the experience of countries that have gone through major wars shows that ordinary market incentives may not be enough. Getmantsev cited the example of Israel, which introduced mandatory savings schemes in the 1970s to finance growing defense spending. One of these instruments was a long-term mandatory military loan known as a defense loan.

The conditions on which it was placed:

• The purchase of military bonds was mandatory with 7% of the taxable income of a worker, self-employed, or enterprise income.
• The rate of return was 5%, and the income from the bonds was not taxed.
• The principal was additionally indexed to the cost of living index.
• The first loans (from 1970) were to be repaid in 1986, in 12 equal monthly installments. Interest was paid in equal tranches every 3 years starting in October 1977.

In this regard, he asked whether a similar mandatory scheme is possible in Ukraine.

“Whether such a mandatory savings scheme can be introduced in Ukraine (exclusively for wartime and exclusively for financing the security and defense forces) is a matter of deep political, public and professional discussion. Yes, we already have a military fee (by the way, Israel had a similar military fee, the war levy). However, of course, these are different tools for financing the war effort, with the only thing they have in common being mandatory participation in paying the tax or purchasing bonds,” emphasized Hetmantsev.

He also added that the state can develop individual plans for the mandatory purchase of military bonds for the population through state-owned banks.

“I also believe that on the part of state-owned banks, we should move to a certain format of mandatory purchase of military bonds based on individual plans to be developed by the Ministry of Finance and the National Bank of Ukraine,” said the MP.

Hetmantsev believes that this is the first attempt to publicly discuss this important issue, emphasizing the need for additional domestic sources of defense funding.

“To the advocates of liberal ideas, I would like to say that I do not consider such proposals adequate for peacetime. However, the war continues, and no one knows how long it will last. Regardless of the outcome of the US elections and external support, we must increase additional domestic sources of funding for the war effort. Consider this the first attempt to publicly discuss this complex issue,” the politician said.

To implement such an initiative, Hetmantsev emphasizes the importance of strengthening the economy through the fight against corruption and the de-shadowing of business.

“Thus, I consider all possible resources to be additional internal sources, first of all, those related to the de-shadowing of the economy and the fight against corruption. We are fighting for this within the framework of legislative work and parliamentary control, which is evident, in particular, in the overfulfillment of the revenue plan by the tax service by UAH 67 billion for 10 months of this year. But this post is about a separate topic – stimulating the attraction of domestic savings for the needs of the security and defense forces – from banks, businesses and the public,” he summarized.