#Poverty

The initiative to lower VAT on food and medicines to 5% has divided experts: some see it as salvation from poverty, others fear a blow to the defense budget.

The war and economic crisis have pushed over 40% of Ukrainians below the poverty line. Low incomes and inflation worry citizens more than the frontline, demanding systemic government action.

The 2027 budget draft fails to offer systemic answers to war challenges, preserving record poverty, the shadow economy, and a deep crisis in key sectors.

Kharkiv mayor Ihor Terekhov proposed cutting VAT on basic food and medicines from 20% to 5% instead of raising the rate, but conditional on controlling retailer markups and protecting individual entrepreneurs (FOP).