Financial instruments for the development of territorial communities: optimization of tax revenues

Анотація

The article discusses modern approaches to strengthening the financial capacity of territorial communities in Ukraine in the context of military challenges and post-war recovery, with an emphasis on optimizing local budget tax revenues. It analyses the transformation of the role of territorial communities as key actors in socio-economic development, responsible for infrastructure reconstruction, provision of basic public services, and creation of preconditions for sustainable growth. Considerable attention is paid to the problem of asymmetry between the revenue and expenditure sides of local budgets, which is exacerbated by the decline in economic activity, migration processes, and the growth of social and recovery expenditures. The paper examines tax revenues as a basic tool for community financial autonomy, in particular the roles of personal income tax, land tax, and other local taxes and fees. It reveals the key problems in their administration, including inefficient use of land resources, outdated normative monetary valuation, shadow employment, and incomplete tax accounting. Separately, it analyses ways to increase the effectiveness of land tax by updating the normative monetary valuation, conducting a comprehensive inventory of land, integrating cadastral and tax registers digitally, and strengthening liability for violations of tax legislation. The article also examines the institutional and administrative aspects of improving the collection of personal income taxes, particularly the issue of its redistribution among communities, taking into account taxpayers’ actual residence, the de-shadowing of the labour market, and the introduction of incentive mechanisms to encourage communities to expand the tax base. It justifies the feasibility of introducing new local taxes, particularly a tax on the use of commercial real estate, as a tool for diversifying local budget revenues. Attention is paid to the transfer of powers to administer local taxes to local self-government bodies and the integration of tax policy with the strategic development goals of territorial communities in the post-war period. Keywords: territorial communities, financial capacity, development, local taxes, local self-government bodies, management.

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