Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets
The article is considered the main trends of government decentralization process, as well as international experience and domestic practice of forming different level of budget revenues. Recommendations and proposals for improving the mechanism of formation of revenue of budgets of local governments...
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Ostrovetskyy, V. 2018-03-07T11:34:24Z 2018-03-07T11:34:24Z 2017 Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets / V. Ostrovetskyy // Економічний вісник Донбасу. — 2017. — № 4 (50). — С. 82-88. — Бібліогр.: 25 назв. — англ. 1817-3772 https://nasplib.isofts.kiev.ua/handle/123456789/130906 336.14+336.22:35.071.6(477) The article is considered the main trends of government decentralization process, as well as international experience and domestic practice of forming different level of budget revenues. Recommendations and proposals for improving the mechanism of formation of revenue of budgets of local governments, including by improving tax depreciation, taxation of individuals' income and consumption of excisable goods is suggested with account the needs of balanced interests of the state, local governments and taxpayers. У статті аналізуються основні тенденції процесу децентралізації державного управління, а також світовий досвід і вітчизняна практика формування доходів бюджетів різного рівня. Рекомендації та пропозиції щодо удосконалення механізму формування доходів бюджетів органів місцевого самоврядування, у тому числі, за рахунок удосконалення податкової амортизації, оподаткування доходів фізичних осіб та споживання підакцизних товарів обґрунтовано з урахуванням потреби щодо збалансування інтересів Держави, органів місцевого самоврядування та платників податків. В статье анализируются основные тенденции процесса децентрализации государственного управления, а также мировой опыт и отечественная практика формирования доходов бюджетов разного уровня. Рекомендации и предложения по совершенствованию механизма формирования доходов бюджетов органов местного самоуправления, в том числе, за счет совершенствования налоговой амортизации, налогообложения доходов физических лиц и потребления подакцизных товаров обоснованы с учетом потребности сбалансированности интересов государства, органов местного самоуправления и налогоплательщиков. en Інститут економіки промисловості НАН України Економічний вісник Донбасу Finance Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets Бюджетно-податкова політика України в умовах децентралізації: доходи місцевих бюджетів Бюджетно-налоговая политика Украины в условиях децентрализации: доходы местных бюджетов Article published earlier |
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| title |
Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets |
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Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets Ostrovetskyy, V. Finance |
| title_short |
Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets |
| title_full |
Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets |
| title_fullStr |
Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets |
| title_full_unstemmed |
Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets |
| title_sort |
fiscal policy of ukraine in conditions of decentralization: revenue of local budgets |
| author |
Ostrovetskyy, V. |
| author_facet |
Ostrovetskyy, V. |
| topic |
Finance |
| topic_facet |
Finance |
| publishDate |
2017 |
| language |
English |
| container_title |
Економічний вісник Донбасу |
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Інститут економіки промисловості НАН України |
| format |
Article |
| title_alt |
Бюджетно-податкова політика України в умовах децентралізації: доходи місцевих бюджетів Бюджетно-налоговая политика Украины в условиях децентрализации: доходы местных бюджетов |
| description |
The article is considered the main trends of government decentralization process, as well as international experience and domestic practice of forming different level of budget revenues. Recommendations and proposals for improving the mechanism of formation of revenue of budgets of local governments, including by improving tax depreciation, taxation of individuals' income and consumption of excisable goods is suggested with account the needs of balanced interests of the state, local governments and taxpayers.
У статті аналізуються основні тенденції процесу децентралізації державного управління, а також світовий досвід і вітчизняна практика формування доходів бюджетів різного рівня. Рекомендації та пропозиції щодо удосконалення механізму формування доходів бюджетів органів місцевого самоврядування, у тому числі, за рахунок удосконалення податкової амортизації, оподаткування доходів фізичних осіб та споживання підакцизних товарів обґрунтовано з урахуванням потреби щодо збалансування інтересів Держави, органів місцевого самоврядування та платників податків.
В статье анализируются основные тенденции процесса децентрализации государственного управления, а также мировой опыт и отечественная практика формирования доходов бюджетов разного уровня. Рекомендации и предложения по совершенствованию механизма формирования доходов бюджетов органов местного самоуправления, в том числе, за счет совершенствования налоговой амортизации, налогообложения доходов физических лиц и потребления подакцизных товаров обоснованы с учетом потребности сбалансированности интересов государства, органов местного самоуправления и налогоплательщиков.
|
| issn |
1817-3772 |
| url |
https://nasplib.isofts.kiev.ua/handle/123456789/130906 |
| citation_txt |
Fiscal policy of Ukraine in conditions of decentralization: revenue of local budgets / V. Ostrovetskyy // Економічний вісник Донбасу. — 2017. — № 4 (50). — С. 82-88. — Бібліогр.: 25 назв. — англ. |
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2025-11-25T22:43:42Z |
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| fulltext |
V. Ostrovetskyy
82
Економічний вісник Донбасу № 4(50), 2017
UDC 336.14+336.22:35.071.6(477)
V. Ostrovetskyy,
PhD (Economics),
Kyiv
FISCAL POLICY OF UKRAINE IN CONDITIONS OF DECENTRALIZATION:
REVENUE OF LOCAL BUDGETS
The formation and development of The Institute of
Local Government in Ukraine, provided with sufficient
sources of funding for constitutional powers, determines
the need to develop an updated format for relations
between the State, local government and taxpayers
(business and households).
The main task in the area of development of local
government of Ukraine, which is simultaneously a sig-
nificant problem, is the strengthening of revenue
sources of local self-government bodies in Ukraine in
order to create economically viable, competitive and
self-owner United Territorial Communities (further –
UTC).
Modernization of the model of local self-gover-
nance, which is a priority of Ukraine's current economic
policy, requires the development of balanced, transpa-
rent and effective decisions on improving the process of
forming the financial resources of UTC.
Analysis of research and publications. Methodo-
logical foundations, basic approaches, principles, condi-
tions, criteria of decentralization of public administra-
tion are disclosed and substantiated in the writings
K. Andersson, D. King, A. Larson, R. Musgrave,
W. Oates, A. Nygren, R. Crook, A. Sverrisson,
G. Hughes, S. Smith, G. Tabellini and other authors.
The issues of state regulation of the economy, in
the conditions of changes in the basic principles of state
administration, which caused by reformatting relations
between the central government and local self-govern-
ment bodies, are considered to the works of many lead-
ing Ukrainian scientists, particular, V. Besedin, T. Bo-
golip [1], T. Bondaruk [2], Z. Varnaliy, V. Vishnevsky,
N. Deyeva [3], I. Luninf [4], V. Lyashenko, V. Oparin,
V. Symonenko, V. Stolyarov and others. The writings of
these authors discuss theoretical issues and provide
practical recommendations on the field of public finance
management, including the tax system.
Topicality. The basic principles, principles, and
criteria, as well as the proportions, forms, and mecha-
nism of accumulation of financial resources at different
levels of government, are of particular importance in
the process of transforming the relationship between the
central level of government and local jurisdictions. Be-
cause any innovation in public administration needs fi-
nancial support at all stages of their development, im-
plementation, and administration. Accordingly, they re-
quire theoretical substantiation and the main vectors of
the transformation of the income base of local self-go-
vernment, oriented on the formation of budgets of local
self-government bodies of Ukraine, capable of provid-
ing accelerated regional development in all spheres of
economic and other activities.
The goal of the research. The purpose of this pub-
lication is to identify certain areas of further improve-
ment of the fiscal legislation of Ukraine on the basis of
generalization of theoretical and methodological prin-
ciples of decentralization of public administration,
world experience in the formation of a resource base of
jurisdictions of local importance, and subsequent revi-
sion of certain significant norms of accumulation of fi-
nancial resources at all levels of the budgetary system of
Ukraine .
Presenting of the main material. The issues of
developing an effective multilevel budget system are
crucial for any country in the world. However, in spite
of the possibility of introducing a number of basic prin-
ciples, conditions and criteria for the formation of inter-
governmental fiscal relations, an ideal model of rela-
tions between the central level and local jurisdictions do
not exist in practice. This is due to the diversity of public
administration systems used in many countries around
the world.
The basic principles and criteria of inter-budgetary
relations are disclosed in the works of D. King [5],
R. Musgrave [6] and W. Oates [7]. Many studies have
shown that decentralization can lead to some improve-
ment in the provision of public services by bringing the
public closer to the decision-making process, thus en-
hancing the capacity of the governing bodies through the
harmonization of voters' preferences in of the distribu-
tion of public resources [8]. At the same time, it is noted
that decentralization in some - to the deterioration of the
quality of service provision, the growth of corruption,
destabilization of the macroeconomic situation and in-
hibition of economic growth.
Several types of research have argued that decen-
tralization contributes to the fact that governments will
take of the needs of residents in their territories [9-12].
Other researchers take to argue that decentralization is a
complex and ambiguous phenomenon, but ultimately,
positively affects the welfare of the local population
[13].
It is noted that the results of decentralization will
depend on the wider context, the format and extent of
Finance
V. Ostrovetskyy
83
Економічний вісник Донбасу № 4(50), 2017
the transformations, and the quality of public manage-
ment. Decentralization contributes to reducing the level
of regional inequality, reducing central level expendi-
tures on the maintenance and development of infrastruc-
ture, road management, in particular, reducing corrup-
tion and improving the quality of democratic gover-
nance, both in large cities and in small municipalities.
Other researchers highlight the negative aspects of
decentralization. For example, the introduction of par-
ticipatory mechanisms in some Asian and Latin Ameri-
can countries has led to new forms of Corruptive rents
at the local level, rather than a more transparent and
equitable distribution of public resources as envisaged
by the developers of the relevant state policy.
Critics of decentralization argue that local authori-
ties are too corrupt and lacking technical, human and fi-
nancial resources to provide a wide range of diverse
community services that meet local needs. The propen-
sity to wastefully, including the conduct of questionable
economic experiments, may jeopardize macroeconomic
stability [14-15].
The peculiarities of the formation of budgets of lo-
cal government are determined by the model of the state
system. In world practice, several such models are used.
The Anglo-Saxon model, built in the UK, has been
adopted in the United States, Canada, India, Australia
and other federal states. The model is characterized by a
high degree of autonomy of local self-government. In
the countries of continental Europe (France, Italy,
Spain) and in most countries of Latin America, the Mid-
dle East, a model that combines local self-government
with local state administrations and is characterized by
certain limitations of autonomy of local self-govern-
ment. [16, p. 23-25].
Most of the countries use mixed models. But the
overall global trend for the development of public ad-
ministration models is aimed at optimizing the work of
local self-government bodies on the basis of increasing
their autonomy. The choice of a model of intergovern-
mental regulation is a rather complicated issue for each
state. There are different approaches to classifying
countries by types of intergovernmental regulation mo-
dels. The most widespread classification is the similarity
of intergovernmental regulation and the correlation
between the role of central and subnational governance
[17].
For example, in the Nordic countries (Denmark,
Norway, Finland, Sweden), in which GDP per capita
varies within 50-70 thousand US dollars. The United
States, local self-government bodies play a significant
role in financing social expenditures. Half of the total
budget expenditure of these countries, or 25 to 35% of
GDP, is financed from local budgets. At the same time,
these countries are characterized by the largest share of
financial support for the powers of local self-govern-
ment bodies at the expense of taxes that remain at the
disposal of local governance.
Instead, public administration systems in Austria,
Germany, and Switzerland are characterized by the sig-
nificant autonomy of budgets of different levels on the
basis of their active cooperation. The share of local ex-
penditure in total expenditures in these countries varies
between 17-20% or 7-8% of GDP. But, in terms of
providing local government functions at the expense of
their own tax revenues, in Austria, they account for up
to 20% of local expenditures, in Germany – up to 35%,
and in Switzerland – more than 60%.
Other European countries, in particular, Belgium,
Portugal, Spain, Italy, and France, whose GDP per ca-
pita is significantly lower than in other EU countries, at
the level of 20 thousand dollars. The US maintains the
dependence of local budgets on the central level budget.
The share of local expenditure in total expenditures in
these countries ranges from 20 to 50%, or from 6 to 15%
of GDP. On average, from one-third to half of the budget
expenditures of local governments in these countries is
financed through local tax revenues.
The significance of local governments in industri-
alized countries is determined by comparing two indica-
tors: the share of consolidated expenditures and the per-
centage of local expenditures to GDP. Table 1 presents
statistical data on the relative weight of budgetary indi-
cators of different levels of GDP in the context of indi-
vidual European Union (EU) countries.
On average, in the EU countries, local authorities
redistribute at the level of 10-11% of GDP by financing
their own functions and powers. However, in the context
of the EU, there are significant differences in the ratio
of the share of expenditures of local governments in to-
tal expenditures and GDP. In both indicators, the Scan-
dinavian countries (Denmark, Sweden, Finland) are
leaders. The local governance of Denmark allocates
more than 60% of all expenditures, accounting for more
than 30% of GDP. They are followed by Italy, France,
Germany and other countries - old members of the EU.
In these countries, the share of local government budget
expenditures in GDP fluctuates within 10%, or at the
level of 25-30% of total government expenditures over
the relevant period. Close this list Malta, Ireland,
Greece, Cyprus.
At the same time, the potential of economic growth
of jurisdiction, its competitiveness and attractiveness for
placing investments can be characterized by the base of
revenue, the proportions of distribution of financial re-
sources between levels of the budget system.
Some researchers note that in the unitary countries,
the level of centralization of budgetary funds is higher.
Instead, a higher degree of decentralization is observed
in federal countries, in particular in the United States
and Canada. Much of the money in these countries is
accumulated in the budgets of social insurance funds,
local budgets and budgets of Federation members [18].
V. Ostrovetskyy
84
Економічний вісник Донбасу № 4(50), 2017
Table 1
Budget Indicators (Expenditure and Tax Revenues) on the governance
levels in individual countries The European Union in 2015
Country
GDP
Share of expenditures
in GDP, % Share of ex-
penditures of
local budgets
in total ex-
penditures,%
Share of tax revenues
in GDP, %
Total,
billion
dollars
USA
Per capita,
USD USA
Total
budget
Local
budgets
Total
budget
Local budg-
ets
Austria 374 43724 51,6 8,6 16,7 43 1,4
Belgium 455 40106 53,9 7,2 13,4 44,7 2,1
Denmark 295 52114 54,8 34,9 63,7 50,9 12,6
Spain 1200 25864 43,8 6 13,7 33,2 3,3
Italy 1816 29866 50,4 14,5 28,8 43,6 6,9
Germany 3358 40996 44,0 7,8 17,7 36,1 2,5
Norway 389 74822 48,8 16,1 33,0 39,1 5,4
Portugal 199 19121 48,4 5,9 12,2 34,4 2,5
Finland 230 41973 57,7 23,6 40,9 43,9 10,3
France 2422 37675 57,0 11,4 20,0 45,2 5,9
Switzerland 665 80675 33,9 7,1 20,9 26,6 4
Sweden 493 49866 50,3 25 49,7 42,7 15,8
Source: Compiled by the author according to: 1) Eurostat. URL: http://appsso.eurostat.ec.europa.eu/nui/setupDown-
loads.do; 2) ОЕСD / Revenue Statistics - OECD countries: 3) Comparative tables. URL: https://stats.oecd.org/Index.aspx?Da-
taSetCode=REV; 3) IMF / World Economic Outlook Database-April 2016, International Monetary Fund. Accessed on 12 April
2016.
In the EU, on average, the central government re-
distributes 22-24% of GDP; The state government
(Land, Canton) – 4-5% of GDP, local government at
12% of GDP, and social funds – 14-16% of GDP [19].
In general, the EU has a tendency to strengthen the role
of local government in terms of redeployment of GDP
with the simultaneous growth of their socioeconomic
significance [20].
In Ukraine, according to the statistics of the Inter-
national Monetary Fund [21], GDP per capita is esti-
mated at 2 thousand dollars. USA. Bodies of local self-
government finance at the level of 35-40% (12-14% of
GDP) of aggregate consolidated budget expenditures.
That is, taking into account that in Ukraine through the
budget system, on average, 32-34% of GDP is distri-
buted (without taking into account the Pension and other
social funds), then an average of one Ukrainian citizen
per year is at the level of 300-350 USD. USA financing
of public services from the budgets of local self-govern-
ment bodies of Ukraine. The rest, up to $ 500 The
United States is from the State Budget of Ukraine, half
of which is intended to finance of local self-government
bodies in the form of official transfers.
Due to taxes in Ukraine, only one-third of local
authorities' powers are funded. The remaining financial
needs of local government, mainly of a social nature (ed-
ucation, health care), is provided by a system of inter-
governmental transfers in the form of subventions, spe-
cial grants from the State Budget of Ukraine. The dy-
namics of revenue of local government, their structure,
as well as the share of GDP are presented in Table 2.
Following the last reform of the intergovernmental
fiscal relations in 2014 [22] The tendency to reduce the
share of own tax revenues in financing expenditures at
the local level has been observed in Ukraine. If in 2005-
2010 the share of tax revenues of local budgets fluctu-
ated at the level of 42-44%, then by the end of 2015, it
declined to 33% or almost a quarter. However, in 2016,
it was planned to increase funding for local expenditures
at the expense of tax revenues of up to 40%. Similar
tendencies are also noted in the structure of tax revenues
of the consolidated budget of Ukraine. The share of tax
revenues of the State Budget of Ukraine has a steady
tendency to increase (from 75% in 2005 to 80% in 2015-
2016).
As for the share of total revenues of local budgets
of Ukraine in GDP, including tax revenues, the share of
the first has a steady upward trend. Thus, in the interval
(2005-2016), the share of total revenues of local govern-
ments of Ukraine in GDP relative to tax revenues to lo-
cal budgets of Ukraine is outpacing: the share of tax re-
venues in GDP remained almost unchanged against the
background of growth of aggregate local incomes in the
amount of 3% of GDP, or 25%, from 12.2% of GDP in
2005 to 15.2% of GDP in 2016.
In Ukraine, the most important source of budget
revenues of local government is traditionally the tax on
personal incomes. More than half of the tax revenues of
local budgets and a quarter of total revenues of local
self-government bodies are formed at the expense of this
source of revenue. However, statistical data indicate a
tendency towards its reduction in the total revenues of
local budgets of Ukraine. If in 2005 the share of personal
V. Ostrovetskyy
85
Економічний вісник Донбасу № 4(50), 2017
income tax in the total budget revenues was 30% (3.7%
of GDP), then by 2016 only 21.8% (3.3% of GDP) is
expected. An additional financial resource of local self-
government bodies was the share of corporate profit tax,
with 10% of deductions remaining at the disposal of lo-
cal authorities in Ukraine.
Table 2.
The dynamics of budget revenues of local government of Ukraine
for 2005-2016, million UAH
2005 2010 2012 2013 2014 2015 2016
Total (excluding transfers). 30316 80516 100814 105171 101101 120480 152743
Tax Revenues 23589 67576 85852 91191 87334 98218 131066
Tax and duty on personal income 16487 51029 61066 64586 62557 54921 74689
Tax of Corporate profit 192 390 443 675 260 4277 4638
Excise tax 7685 10505
Nontax Revenues 3542 8769 12636 12128 12258 20148 18999
Oter Revenues 3186 4171 2326 1852 1510 2114 2678
Transferts 23358 78881 124460 115848 130601 173980 189543
Total 53660 159397 225274 221019 231702 294460 342286
GDP 441452 1120585 1459096 1522657 1586915 1979458 2262800
Structure of Revenues of Local Budgets of Ukraine,%
Total (excluding transfers). 56,5 50,5 44,8 47,6 43,6 40,9 44,6
Tax Revenues 44,0 42,4 38,1 41,3 37,7 33,4 38,3
Tax and duty on personal income 30,7 32,0 27,1 29,2 27,0 18,7 21,8
Tax of Corporate profit 0,4 0,2 0,2 0,3 0,1 1,5 1,4
Excise tax 0,0 0,0 0,0 0,0 0,0 2,6 3,1
Nontax Revenues 6,6 5,5 5,6 5,5 5,3 6,8 5,6
Oter Revenues 5,9 2,6 1,0 0,8 0,7 0,7 0,8
Transferts 43,5 49,5 55,2 52,4 56,4 59,1 55,4
Разом 100,0 100,0 100,0 100,0 100,0 100,0 100,0
Share of Revenues of Llocal Budgets of Ukraine in GDP,%
Total (excluding transfers). 6,9 7,2 6,9 6,9 6,4 6,1 6,8
Tax Revenues 5,3 6,0 5,9 6,0 5,5 5,0 5,8
Tax and duty on personal income 3,7 4,6 4,2 4,2 3,9 2,8 3,3
Tax of Corporate profit 0,0 0,0 0,0 0,0 0,0 0,2 0,2
Excise tax 0,0 0,0 0,0 0,0 0,0 0,4 0,5
Nontax Revenues 0,8 0,8 0,9 0,8 0,8 1,0 0,8
Oter Revenues 0,7 0,4 0,2 0,1 0,1 0,1 0,1
Transferts 5,3 7,0 8,5 7,6 8,2 8,8 8,4
Total 12,2 14,2 15,4 14,5 14,6 14,9 15,1
Source: compiled by the author according to the State Treasury Service of Ukraine. - Electronic resource. - 2016. – [access
mode]: http://www.treasury.gov.ua/.
However, in conditions of instability of the domes-
tic economic situation in Ukraine, characterized by a de-
crease in volumes and reorientation of national produc-
tion, job losses and real incomes due to unfavorable ex-
ternal conditions, as well as the global trend towards a
reduction in corporate income tax, in other unchanged
circumstances, it is difficult to expect the transformation
of these sources of income from local budgets into a
powerful financial lever of regional development.
The share of the ad valorem component of the ex-
cise tax that has been introduced since 2015 is gradually
increasing. This is due to the low elasticity of demand
for excisable goods, their stable, relatively uniform con-
sumption within the territory of Ukraine, as well as in-
flationary processes.
Attention is drawn to the gradual increase of the
revenue part of the budgets of local government by in-
creasing official transfers in the financing of the local
V. Ostrovetskyy
86
Економічний вісник Донбасу № 4(50), 2017
government of Ukraine. The share of the subsidy article
of sources of financing of the powers of local self-go-
vernment bodies of Ukraine in GDP since 2005 has
grown more than 1.5 times (from 5.3% of GDP in 2005
to 7% of GDP in 2010 and 8.8% Of GDP in 2015-2016),
while the share of own revenue sources in GDP re-
mained virtually unchanged, within 7% of GDP.
In view of the above, it is appropriate to highlight
the tendency towards a gradual reduction of the capacity
of local self-government bodies to fund delegated and
powers at the expense of their own sources and tax re-
venues in particular. Instead, there is a growing burden
on the State Budget of Ukraine in terms of financial sup-
port for local government. Among the explanations of
such negative trends regarding the development of the
income base of local government in Ukraine, which
complicate the formation and implementation of the
State Budget of Ukraine, may be unfavorable external
conditions, which causes the unsatisfactory dynamics of
key indicators of key economic activities. This, in turn,
negatively affects the stability of the exchange rate of
the national currency, stimulates the unwinding of the
inflationary spiral, as well as causes an increase in un-
employment and a reduction in the sphere of material
production.
Among the internal factors should be the imperfec-
tion of fiscal planning, which is acutely manifested in
the process of reformatting the Government and local
budgets through the creation of UTC. At the same time,
according to information from the Ministry of Regional
Development, Construction and Housing of Ukraine in
2016, almost 400 UTC were created in Ukraine, which
generated more than 40 billion hryvnias. Additional in-
come. And from the State Budget of Ukraine in 2016 the
budgets of UTC have transferred to UAH 3.5 bln. Inter-
governmental transfers (basic grant, educational sub-
vention, medical subvention, other subventions, and
grants). For 2017, UAH 9.6 billion is foreseen. Conse-
quently, it is planned to increase the financial possibili-
ties of OTGs in the future due to targeted transfers from
the State Budget of Ukraine without paying due atten-
tion to the development of their own revenue base of lo-
cal authorities in Ukraine.
Compared to the EU member states and the OECD
[23], Ukraine is ranked average in terms of the share of
tax revenues from the state and local budgets in GDP.
Starting from 2010 there has been a tendency to increase
the tax burden on the economy due to taxes on consump-
tion (value added tax and excise tax), which is credited
to the State Budget of Ukraine. Significantly, more than
doubled, the share of corporate income tax in the con-
solidated budget revenues of Ukraine decreased. Conse-
quently, with the adoption of the Tax Code of Ukraine
in 2010, there was a tendency to shift the tax burden to
end users, that is, the broad segments of the population,
while reducing the tax burden on capital [24-25]. At the
same time, in the context of the current economic situa-
tion in Ukraine characterized by lower real incomes and
narrowing of the space for small business entrepreneur-
ship, the main directions of short- and medium-term tax
policy should be somewhat refined with an emphasis on
the expansion of their own Revenue base of local level
administrations.
Conclusions and suggestions. The mentioned
conclusions and observations provide an opportunity to
formulate separate directions of tax legislation reform
on the basis of balancing the interests of the state, local
governments and taxpayers with regard to stabilizing the
economic situation, as well as promoting sustainable de-
velopment of the economic system of Ukraine.
Guided by the above, it is expedient to gradually
shift the tax burden from mobile factors of production
(capital and labor) to non-mobile (land, natural re-
sources), as well as consumption of certain types of
goods whose production is harmful to the environment
(or consumption of which is harmful to health Rights),
in combination with increased efficiency of tax admin-
istration and stimulation of investment activity, includ-
ing by improving the standards of tax depreciation.
It is advisable to gradually increase the share of
corporate profit tax retained at the disposal of local go-
vernment of Ukraine, as well as take measures to im-
prove depreciation policy, turning it into a powerful tool
for attracting investment, especially high-tech. This,
among other things, will help reduce the arrears (tax
debt) on payment of national taxes, corporate income
tax in particular, as well as stimulate the interest of local
government of Ukraine in the development of produc-
tion in their own territories, since tax revenue from tax-
ation of profits of enterprises will remain at their dis-
posal.
As for the excise tax, it should be noted that its
main tax-payers are producers and importers of excisa-
ble goods. However, the production and customs clear-
ance of excisable products in Ukraine are unevenly dif-
ferent from their consumption. Reducing the specific
rates of excise duty paid by producers (importers) of ex-
cisable products with the simultaneous increase of the
ad valorem component remaining at the disposal of local
governments will strengthen the financial potential of
local authorities in Ukraine.
Separately, attention should be paid to the need to
implement specific measures aimed at increasing the
number of UTC that demonstrate an excellent result in
terms of managing their own resources, based on the
wider use of performance indicators in the UTC budget,
to reflect the objectives and results of public expenditure
programs. To this end, it is advisable to implement me-
dium-term programs for improving the quality of public
finance management in Ukraine and UTC based on the
assessment and monitoring of the UTC tax capacity, tak-
ing into account the introduction of transparent incen-
tives for increasing the UTC own revenues base.
V. Ostrovetskyy
87
Економічний вісник Донбасу № 4(50), 2017
Accordingly, among the perspective of researches
aimed at developing and substantiating recommenda-
tions for adjustments and clarifications of certain tax
policy vectors in the context of decentralization of pub-
lic administration in Ukraine, one should highlight de-
velopments aimed at improving depreciation and excise
policy, the mechanism for calculating the income tax of
individuals, as well as special Tax regimes that will en-
able businesses to intensify in depressed regions based
on their needs in the workplace and investment re-
sources based on observance of the principles of distrib-
utive justice tax burden.
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Островецький В. І. Бюджетно-податкова по-
літика України в умовах децентралізації: доходи
місцевих бюджетів.
У статті аналізуються основні тенденції про-
цесу децентралізації державного управління, а та-
кож світовий досвід і вітчизняна практика форму-
вання доходів бюджетів різного рівня. Рекомендації
та пропозиції щодо удосконалення механізму фор-
мування доходів бюджетів органів місцевого само-
врядування, у тому числі, за рахунок удосконалення
податкової амортизації, оподаткування доходів фі-
зичних осіб та споживання підакцизних товарів об-
ґрунтовано з урахуванням потреби щодо збалансу-
вання інтересів Держави, органів місцевого само-
врядування та платників податків.
Ключові слова: органи місцевого самоуправ-
ління, децентралізація, доходи місцевих бюджетів,
податки, регіональний розвиток.
Островецкий В. И. Бюджетно-налоговая по-
литика Украины в условиях децентрализации:
доходы местных бюджетов
В статье анализируются основные тенденции
процесса децентрализации государственного управ-
ления, а также мировой опыт и отечественная прак-
тика формирования доходов бюджетов разного
уровня. Рекомендации и предложения по совершен-
ствованию механизма формирования доходов бюд-
жетов органов местного самоуправления, в том
числе, за счет совершенствования налоговой амор-
тизации, налогообложения доходов физических лиц
и потребления подакцизных товаров обоснованы с
учетом потребности сбалансированности интересов
государства, органов местного самоуправления и
налогоплательщиков.
Ключевые слова: органы местного самоуправ-
ления, децентрализация, доходы местных бюдже-
тов, налоги, региональное развитие.
Ostrovetskyy V. Fiscal policy of Ukraine in con-
ditions of decentralization: revenue of local budgets
The article is considered the main trends of govern-
ment decentralization process, as well as international
experience and domestic practice of forming different
level of budget revenues. Recommendations and pro-
posals for improving the mechanism of formation of
revenue of budgets of local governments, including by
improving tax depreciation, taxation of individuals' in-
come and consumption of excisable goods is suggested
with account the needs of balanced interests of the state,
local governments and taxpayers.
Keywords: local government, decentralization, lo-
cal budget revenues, taxes, regional development.
Received by the editors: 15.08.2017
and final form 22.12.2017
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