Reva’s bad idea

Consequences of raising Unified Social Tax effective rate for monthly salaries exceeding UAH 55,000

The consequences of raising Unified Social Tax effective rate for monthly salaries exceeding UAH 55,000 do not justify the means

Government initiative: Ukraine’s Social Policy has proposed to eliminate the upper tier of the Unified Social Tax (UAH 12,500) and introduce a regressive UST rate ranging from 22% (to 25 monthly minimum wages) to 5% (from 270 monthly minimum wages).

This proposal will affect only employees with a monthly income of more than 15 minimum wages (UAH 55,800+). Based on statistics from Ukraine’s Pension Fund and the State Statistics Committee, as of 2018, the proposed change would affect 93,400 employees accounting for less than 7.8% of the total salary fund.

The regulatory UST rate proposed by the Social Policy Ministry for monthly wages on salaries exceeding UAH 55,800, depending on total wages, would alter effective UST rates across the board. Determining the distribution structure of salaries for the specified 0.92% (or 93,000 employees) requires a detailed calcu…