The Association of Ukrainian Cities (AUC) insists on maintaining 64% of personal income tax (PIT) in local budgets and reverse subsidies.
This was reported by the AUC.
The organization expressed its stance in connection with the Cabinet of Ministers of Ukraine submitting the draft State Budget for 2026 to the second reading, which, according to AUC representatives, ignored the directives of the Verkhovna Rada and the needs of local self-government.
The decision made by the parliament on October 22, 2025, clearly stated that 64% of PIT should remain in the budgets of territorial communities. However, this provision was not included in the updated version of the state budget.
The AUC emphasizes that the removal of the reverse subsidy will negatively impact the financial stability of rural and village communities. Therefore, the association demands that these funds be preserved locally.
The organization also draws attention to the issue of educational subsidies. Local self-government representatives believe that all accumulated balances should remain in communities to cover their educational needs. Meanwhile, in the draft state budget-2026, the government did not allocate 103.2 billion UAH of educational subsidy among communities, withdrew 150 million UAH for the "New Ukrainian School" program, and increased funding for the "Increasing the Prestige of Work in Education" program from 53.8 to 59.8 billion UAH.
Additionally, the draft maintains a provision under which the remaining funds of communities located in temporarily occupied territories are managed by the state. However, the AUC insists that these funds should be utilized by municipalities - local councils or military administrations - particularly for housing construction for residents of those communities.
Before the second reading, the government provided for 13 billion UAH of additional subsidies for 992 communities affected by the war and preserved all other inter-budget transfers agreed with the Association of Ukrainian Cities during the first reading.
According to the updated document, 982 communities will receive a basic subsidy in 2026 amounting to 23.3 billion UAH. A reverse subsidy is to be paid by 203 communities, among which 130 are rural and village communities, totaling 15.5 billion UAH.
The AUC emphasizes that balanced financing of local self-government is key to the development of communities and the recovery of the country amidst war conditions.
Recall that on October 22, 2025, the Verkhovna Rada of Ukraine approved in the first reading the draft Law of Ukraine "On the State Budget of Ukraine for 2026", registration No. 14000, which instructed the Government of Ukraine to take into account 64% of PIT in the structure of local budget revenues, as proposed by the Association of Ukrainian Cities.
