Ukrainian lawmaker Vyacheslav Rublyov and fellow members of the Servant of the People party have launched a bid to preserve local tax revenues in Ukraine.
The parliamentarians are calling on the national legislature to prevent a proposed reduction in the share of personal income tax retained by local territorial communities, demanding that the rate remain at 64 percent rather than falling to 60 percent.
Under the draft State Budget for 2027, registered as Bill No. 16000, the Ukrainian government proposes cutting the proportion of personal income tax left in municipal coffers by four percentage points. The proposal would shift significant revenue away from local councils during ongoing wartime economic pressures.
Rublyov announced the initiative on Facebook, stating that keeping 64 percent of personal income tax within communities is necessary to protect the financial independence of local self-government in the 2027 budget. He described the parliamentary budget process as a battle to ensure that local authorities have adequate resources to maintain vital services, prepare for the upcoming heating season, support military units, and fund municipal operations.
Local budget protection and municipal services
Personal income tax serves as one of the primary revenue streams for municipal budgets across Ukraine. Local councils rely on these funds to finance basic infrastructure, maintain public utilities, and manage local administrative services.
Rublyov noted that local communities have consistently campaigned to maintain the 64 percent tax allocation throughout the entire duration of martial law. He stressed that the extra four percent represents a vital, guaranteed resource that enables village, settlement, and city councils to pay for energy supplies, clear utility bills, and keep municipal systems functioning during winter months.
The lawmaker confirmed that he and several parliamentary colleagues have submitted official amendments to the draft 2027 budget bill. He stated that their position fully mirrors the official demands of the Association of Ukrainian Cities and other national organisations representing local self-government bodies.
Wartime role of communities and fiscal equalisation
Servant of the People is the governing party in Ukraine, holding a majority in the Verkhovna Rada following parliamentary elections in 2019. Territorial communities form the foundation of Ukraine's local governance structure, created during administrative decentralisation reforms to grant municipalities greater financial autonomy.
Highlighting the wartime responsibilities of municipal councils, Rublyov said that strong local self-government serves as a dependable rear guard for the state. He added that local communities are the first to respond to emergency challenges, providing direct assistance to military units while caring for internally displaced persons who have fled conflict zones. Depriving local councils of financial resources would put the basic functioning of towns and villages at risk.
In addition to tax retention, the lawmakers are advocating for the preservation of reverse subsidies. In Ukraine's fiscal system, the reverse subsidy mechanism redistributes funds between the national treasury and local budgets, taking surplus revenues from wealthier municipalities to aid financially vulnerable regions and maintain overall local stability.
As parliament prepares to examine the draft 2027 budget, a coalition of Servant of the People deputies is forming to resist any reductions to municipal funding and preserve existing intergovernmental fiscal arrangements.
