On Thursday, Ukraine’s Parliament passed the largest tax increase since Russia’s full-scale invasion, an unpopular but necessary step to fund its ongoing war efforts.

The new legislation raises the tax on personal income, increasing it from 1.5 percent to 5 percent, and also doubles taxes on bank profits to 50 percent for this year. Additionally, taxes on other financial institutions’ profits will rise from 18 percent to 25 percent, among other measures.

The funds from this tax hike will support an additional $12 billion in military spending this year. Yaroslav Zhelezniak, the deputy chairman of the finance, tax, and customs policy committee, described the decision as a “historic tax increase.”

Although the move may further strain Ukraine’s struggling economy, officials argue that it is essential to maintain the country’s defense against Russia, which has also been increasing its military spending. President Volodymyr Zelensky is expected to sign the bill soon.

Oleksii Movchan, a member of President Zelensky’s party and deputy chairman of the economic development committee, admitted that the bill was not popular. “We will be disliked for this, but we have no other option,” he said. “This is about our survival in this war.”

While Ukraine receives substantial military aid from international allies, the country must use its own revenue to pay service members and produce domestic arms, which makes up more than half of its $100 billion annual budget, Movchan said.

In the past, the government aimed to avoid placing the financial burden on the public, as many citizens had already suffered significant losses due to the war. However, with the conflict stretching into its third year, Ukrainian officials warned that raising taxes was now unavoidable.

Deputy Economy Minister Oleksii Sobolev emphasized the need to stabilize the macroeconomic situation while continuing to support the military. He stated, “Every bit of revenue generated within the country, from taxes or businesses, is needed for the army.”

According to the Kyiv School of Economics, the bill could raise an additional $2.8 billion in tax revenue next year, around 14 percent more than in 2024. However, amendments made during the debate may impact the final revenue figures.

As Ukraine’s military struggles to hold ground in the east, the urgency to shore up the state budget has grown. Meanwhile, Western support could wane due to war fatigue. President Zelensky is on a tour of European capitals to request increased military aid, but once he returns, he may face public backlash over the tax increases.

Many residents of Kyiv have already voiced their disapproval. Lola Kuzmina, a 47-year-old store employee, expressed her frustration with the new taxes, noting that people are already struggling financially. Others, like accountant Anna Paskal, 44, believe the tax increases are manageable and necessary to support the military.

Despite differing opinions, both supporters and critics of the bill share concerns that the new tax revenue may be lost to corruption. Ukraine has recently seen several officials arrested for hoarding large amounts of cash, adding to the public’s distrust in how funds are used.

Solomiia Bobrovska, an opposition lawmaker, echoed this sentiment during the debate, expressing doubts that the state would effectively manage the new funds. “If the money had been properly allocated,” she said, “we wouldn’t still need volunteers to raise money for our army.”