Sienkevych: Mykolaiv will lose out on around ₴9 billion in personal income tax over three years due to the withdrawal of «military» tax
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- Alina KvitkoReporter
Oleksandr Sienkevych: the state must take into account the losses incurred by local authorities as a result of the withdrawal of the «military» personal income tax. Photo: NikVesti archiveDue to the withholding of the «military» personal income tax, Mykolaiv’s budget will lose out on approximately 8.9 billion hryvnias between 2023 and 2026. The Association of Ukrainian Cities is proposing that these funds be returned to local authorities and that losses from previous years be compensated.
Mykolaiv’s mayor, Oleksandr Sienkevych, spoke about this in a comment to NikVesti.
According to him, in October and December 2023, Mykolaiv lost out on around 700 million hryvnias. In 2024, the city lost 2.5 billion hryvnias, and in 2025 — 2.7 billion hryvnias. In 2026, expected losses are set to amount to a further 3 billion hryvnias.
«Due to the withdrawal of the «military» personal income tax, Mykolaiv’s budget has already lost significant funds. This is a substantial resource that previously remained at the community’s disposal and could have been channelled towards meeting the needs of the city and its residents,» said Oleksandr Sienkevych.
It is not yet known how much Mykolaiv could receive in 2027 if the «military» personal income tax were returned to local authorities. According to the mayor, the exact amount will depend on future revenue and the shape of next year’s State Budget.
The Association of Ukrainian Cities proposed returning the «military» and «law enforcement» personal income tax to local authorities during budget consultations with the Ministry of Finance on 8 September. These took place as part of the preparations for the 2027 State Budget.
Oleksandr Sienkevych represented the Association of Ukrainian Cities’ position on this issue during the consultations. He also emphasised that the state must take into account the funds that local budgets have already lost due to the withdrawal of personal income tax.
«Our position is clear: if this resource has been taken away from the local authorities, the state must take into account the losses incurred by local budgets when drawing up the 2027 budget,» he noted.
It is not yet known exactly how much Mykolaiv may be compensated. According to Oleksandr Sienkevych, no specific figure has yet been agreed.
At the same time, the Association of Ukrainian Cities will continue to insist on the return of the «military» personal income tax to local authorities.
«We are talking about the need to compensate local authorities for the losses they have suffered due to the withdrawal of the «military» personal income tax in previous years. For local authorities, this is not merely a matter of additional revenue. It is a question of the financial capacity of towns to fulfil their responsibilities, maintain urban infrastructure and provide essential services to residents,» said Oleksandr Sienkevych.
In addition, the Association of Ukrainian Cities’ proposals for the 2027 State Budget include retaining 64 per cent of personal income tax in local authority budgets, ceasing the withdrawal of reverse subsidies, and increasing support for the local authorities hardest hit by the war.
What about the «military» personal income tax?
As a reminder, from 2024, «military» personal income tax was transferred from local budgets to the state budget. Previously, 64 per cent of these revenues remained with the local authorities. According to the Association of Ukrainian Municipalities (AMU), out of the 77.3 billion hryvnias of «military» personal income tax withdrawn, 32 billion hryvnias had been used for military purposes at that time. The Association emphasised that local authorities must receive sufficient resources to carry out their duties and provide services to residents.
In 2025, Mykolaiv’s mayor, Oleksandr Sienkevych, noted that due to the withdrawal of the «military» personal income tax, the city had lost 2.7 billion hryvnias in revenue in 2024. As a result, Mykolaiv’s priority budget expenditure was cut by 1.2 billion hryvnias.
Furthermore, whilst preparing the State Budget for 2026, the government proposed reducing the share of personal income tax retained by local authorities from 64 per cent to 60 per cent. The Association of Ukrainian Cities estimated at the time that this could result in local budgets losing a further 15.9 billion hryvnias.
The budget shortfall in Mykolaiv
The city authorities have been discussing the budget deficit issue since the start of the year.
Back in January, Mykolaiv’s mayor, Oleksandr Sienkevych, stated that the city needed to receive around 1.1 billion hryvnias from the state budget. In May, the city council re-applied to the Cabinet of Ministers for an additional grant — this time amounting to 1.18 billion hryvnias.
Oleksandr Senkevych explained at the time that the repeat request was linked, in particular, to the lack of a response from the Ministry of Finance and the Cabinet of Ministers.
«We reached this decision as a result of the lack of feedback from the Ministry of Finance and the Cabinet of Ministers. It was also due to the change in the composition of the Cabinet and the appointment of a new Prime Minister. We are raising this matter once again regarding a situation that has not changed in any way since December 2025, when we were drawing up the budget with you. We are approaching them again and, as they say, we now have more representatives from the Mykolaiv region in this Government. We very much hope that they will help us secure this grant, if not in full, then at least in part. However, it would be desirable for all matters relating to the grant to be funded,» said the mayor.
As early as August 2026, the Cabinet of Ministers instructed the Ministry of Finance and other central government bodies to consider Mykolaiv’s request for an additional grant and to submit their proposals.
Meanwhile, on 6 August, Mykolaiv City Council allocated nearly 45 million hryvnias to co-finance the installation of modular boiler houses. These funds became available thanks to the budget’s revenue exceeding the target for January–July. According to the Department of Finance, revenue targets for the seven-month period were met at 110.6 per cent.
However, these 44.95 million hryvnias do not solve the overall deficit problem. The money will be allocated as a 10 per cent co-funding contribution to the state programme for the installation of modular boiler houses in Mykolaiv. The total cost of the project is around 450 million hryvnias, of which around 400 million is to be provided by the state. The boiler houses are intended to serve as a backup heat source in the event of disruptions to the centralised heat supply.
Vitalii Kim, Ukraine’s Minister for Veterans’ Affairs and a member of the Mykolaiv City Council, also reported that Mykolaiv has yet to receive a decision regarding an additional subsidy of 1.18 billion hryvnias from the state budget. The issue remains unresolved with the Ministry of Finance.
