State budget: Mykolaiv now has to cover the difference in heat tariffs, which was to be compensated by the state

Communities were left with 64% of PIT, but the government "took" 4% to pay off debts. Photo: NikVesti

The Verkhovna Rada has adopted the state budget for the next year, enshrining the provision that local budgets will retain 64% of personal income tax. At the same time, communities will actually receive only 60% of personal income tax, as the Rada obliged them to use the additional 4% to pay off the debt on the difference in tariffs and energy payments.

This was reported by NikVesti.

According to Roksolana Pidlasa, Chair of the Budget Committee, this model should help communities to curb the growth of utility tariffs for the population, but reduces the amount of free resources they can dispose of.

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«We have added 4% of the personal income tax to local budgets' revenues. Thus, 64% of the personal income tax will be allocated to local budgets. In addition, we have set up a targeted allocation of these additional funds for energy payments and for the repayment of arrears on the difference in tariffs for the same energy, so that local authorities can avoid raising utility tariffs for the population. Accordingly, in order to balance these losses of the state budget, we have excluded the subvention for the difference in tariffs,» said Roksolana Pidlasa.

Roksolana Pidlasa also clarified that in order to balance the state budget expenditures, MPs excluded the subvention for the difference in tariffs in the amount of 15.2 billion hryvnias.

As NikVesti found out, until 2021, cities also received only 60% of the personal income tax, but then it was decided that all local governments would receive an additional 4%, which would be used to cover the difference in energy tariffs so as not to raise heating tariffs for the population. For Mykolaiv, these are two companies: the municipal company «Mykolaivoblteploenergo» and the state-owned CHP. Although this decision was not formally enshrined in law, Mykolaiv fulfilled its obligations in 2022, Mykola Lohvinov, director of the regional heating company, told us. Since 1 July 2022, the state has undertaken to compensate for the difference in tariffs, but has not fulfilled them. At the same time, 64% of the PIT remained in the local level.

As of December 2025, the state's debt to the utility company «Mykolaivoblteploenergo» amounted to 1 billion 195 million hryvnias. These funds were to be paid to the company for the difference between the approved and economically justified tariff.

Now, the obligation of local authorities to cover the difference in tariffs has been enshrined in law since 2026.

Mykolaiv's 2025 budget envisages that PIT revenues will amount to 2.8 billion hryvnias. Therefore, the 4% that the city now has to pay for the difference in tariffs will amount to approximately 180 million hryvnias per year. Given the current debts of «Mykolaivobtleploenergo», this will not significantly change the overall financial situation of the company.

The PIT issue is particularly sensitive for frontline communities. In the NikVesti article: «Less Tax, Less City: Why the PIT Cut Means for Mykolaiv» describes how the reduction in the tax share directly affects the city's budget, which is rebuilding schools, hospitals and critical infrastructure. The Mykolaiv City Council has already called on the government and parliament to retain 64% of PIT for communities.