Tax revenues as a formation component of the territorial communities' income

Abstract

The article examines the role of tax revenues in the formation of territorial communities' incomes in Ukraine under the conditions of fiscal decentralization and martial law. The principles of forming the revenue base of local budgets are revealed, and the place of the tax revenues in the system of financial support for local self-government bodies is determined. The dynamics of the share of local budget revenues in GDP regarding the 2015–2025 period and the structure of territorial communities' budgets tax revenues are analyzed. It has been found that the tax revenues remained a key source of financial autonomy for the local self-government bodies, while their financial significance directly depended on the architecture of the fiscal space and the nature of inter-budgetary relations. It is proved that the implementation of the fiscal decentralization reform contributed to the growth of the share of the local taxes and fees in the structure of the local budget revenues and strengthened the financial capacity of the territorial communities. Particular attention is paid to the influence of the external shocks on the transformation of the Ukrainian fiscal policy. The specifics of applying stimulating and compensatory instruments of the tax regulation under the martial law are characterized, considering the changes in the administration mechanisms of the flat tax and property taxation. The dynamics of local taxes and fees revenues, their correlation with GDP and the total tax revenues, as well as regional peculiarities of local budget revenue formation are investigated. It is determined that the greatest fiscal potential for the territorial communities belonged to the flat tax and the property tax, which demonstrated relative stability even under the influence of exogenous socio-economic shocks. The necessity of further improvement of the local taxes' and fees\ administration mechanisms in order to strengthen the financial self-sufficiency of the territorial communities and ensure sustainable socio-economic development of Ukrainian regions is substantiated.