Rent Payments for the Special Use of Water Serve As a Resource- and Cadastre-Based Environmental Tax Instrument for the Regulation of Water Use

Abstract

Abstract: By its economic nature, the rent payment for the special use of water resources belongs to the group of resource-based taxes, the functioning of which is grounded in cadastral information and the quantitative and qualitative characteristics of the respective resources. The purpose of this study is to examine the Ukrainian mechanism of this rent payment, to identify its key advantages and shortcomings, and to substantiate directions for its improvement. The methodological framework of the research is based on the analysis of positive features, existing problems, and proposals for improving the procedure for the assessment and payment of the rent, as well as for strengthening its regulatory capacity. The study employs methods of analysis and synthesis, comparison, and tabular and graphical presentation of results. The findings of the study demonstrate that the positive effects of introducing this fiscal instrument include the stable formation of consolidated budget revenues and the stimulation of water abstractors and water users towards prudent and rational water use. The rent payment also serves as a lever for harmonising the private business and economic interests of water abstractors and users with the public environmental needs of territorial communities and the state, thereby fostering the development of conscious and responsible behaviour among taxpayers with regard to water abstraction and the operation of water bodies. The systemic shortcomings of the rent payment for the special use of water resources include an understated level of tax rates, an inadequate level of water cadastral activities, and fragmented digitalisation of water cadastral data. An additional problem is the practice of allocating accumulated rent revenues to purposes other than the financing of measures aimed at the protection, restoration, and qualitative improvement of the condition of water bodies. Conclusions. Improving the mechanism for levying the analysed payment and strengthening its regulatory impact on water abstraction and use should be pursued through increasing tax rates, introducing tax incentives for entities that employ closed-loop water supply systems, water-saving technologies, and comply with ESG environmental standards in water use, restoring comprehensive water cadastral operations, updating the information arrays of water management geographic information systems, and ensuring the earmarked use of revenues from the rent payment for the special use of water resources to finance the conservation and reproduction of water bodies and the modernisation of water abstraction technologies.