Formation of local government budget revenues: assessment of changes caused by the implementation of decentralization reform in Ukraine in the pre-war period

Анотація

Introduction. In the context of Ukraine's European integration course and the state's implementation of the decentralization reform, the importance of local self-government as the basis for the development of territorial communities is increasing. Particularly relevant are the issues of filling local budgets with revenues to ensure that local authorities perform their functions, adequately finance social and economic programs, and create the preconditions for improving the quality of life of the population. Problem Statement. Filling local budgets with funds, creating a financial basis for the development of local self-government. Purpose. Research on changes in local budget revenue formation caused by the implementation of decentralization reforms in Ukraine (with a focus on territorial community budgets), determination of losses incurred by local treasuries and the additional revenues they received in the pre-war (before the start of full-scale war) period of reform (2015–2021), justification of ways to preserve budget revenues in an inflationary economy. Methods. The article uses general scientific methods, namely: descriptive, statistical and economic, monographic, and theoretical generalization. Results. The changes in the formation of local budget revenues (with a focus on the budgets of territorial communities) that took place in Ukraine during the implementation of the decentralization reform in 2015-2021 are described. The amounts of losses and additional revenues received by budgets as a result of the changes implemented are calculated. The methods enshrined in current legislation that allow budget revenues to be protected from inflationary depreciation are described. Conclusions. The implementation of the decentralization reform in Ukraine was accompanied by significant changes in budgetary and tax rules, including the introduction of new/termination of existing mandatory payments, revision of certain elements of taxes and fees, and changes in the proportions of payments distributed among budgets. These changes did not have an unambiguous impact on local government revenues, causing them to increase on the one hand and decrease on the other. The level of real increase in local government budget revenues for the period from 2014 to 2021 (38 %) recorded in the paper indicates that the reform has increased the financial capacity of territorial communities. It is determined that an important role in preserving local budget revenues is played by the relevant ways used by the legislator, including the revision of tax rates, minimum wages and subsistence minimums, and indexation of the monetary value of land plots. The author emphasizes the actual application of a unified approach to the formation of revenues of the budgets of territorial communities (regardless of their status – rural, settlement, city) from 2021. The author identifies the consistently high role of personal income tax and the growing role of local taxes and fees, excise tax and rent in filling local budgets, which has a positive impact on the level of financial support for territorial communities and creates prerequisites for their development.

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