The Association of Cities of Ukraine (AUC) insists on maintaining 64% of the personal income tax (PIT) and reverse subsidy in local budgets.
This was reported by the AUC.
The organization expressed this position in light of 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-governance.
The decision of the parliament dated October 22, 2025, clearly stated that 64% of PIT should remain in the budgets of territorial communities. However, this provision was not taken into account in the updated state budget version.
The AUC emphasizes that the removal of the reverse subsidy will negatively affect the financial stability of rural and village communities. Therefore, the association demands that these funds be retained locally.
The organization also highlights the issue of educational grants. According to local self-governance representatives, all accumulated reserves should remain in the communities to cover their educational needs. Meanwhile, in the draft state budget-2026, the government did not allocate 103.2 billion UAH of educational grants among communities, withdrew 150 million UAH for the "New Ukrainian School" program, and increased funding for the "Improving the Prestige of Work in Education" program from 53.8 to 59.8 billion UAH.
The draft also maintains a provision whereby the state manages the remaining funds of communities located in temporarily occupied territories. However, the AUC insists that these funds should be utilized by municipal authorities - local councils or military administrations - particularly for housing construction for residents of these communities.
Prior to the second reading, the government allocated 13 billion UAH in additional subsidies for 992 communities affected by the war and retained all other inter-budget transfers agreed with the Association of Cities of Ukraine in 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 will be paid by 203 communities, of which 130 are rural and village communities, totaling 15.5 billion UAH.
The AUC stresses that balanced funding for local self-governance is key to the development of communities and the country's recovery amid 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", register No. 14000, which instructed the Government of Ukraine to consider including 64% of PIT in the composition of local budget revenues, as proposed by the Association of Cities of Ukraine.
