DEVELOPMENT OF FINANCIAL DECENTRALIZATION AS A BASIS FOR SELF-SUFFICIENCY OF TERRITORIAL COMMUNITIES

Tetiana Stroiko (), Natalia Danik () and Dmytro Prokofyev ()
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Tetiana Stroiko: V.O. Sukhomlynskyi Mykolaiv National University, Ukraine
Natalia Danik: V.O. Sukhomlynskyi Mykolaiv National University, Ukraine
Dmytro Prokofyev: V.O. Sukhomlynskyi Mykolaiv National University, Ukraine

Baltic Journal of Economic Studies, 2021, vol. 7, issue 4

Abstract: The purpose of this article is to analyze the achieved results in the process of financial decentralization in Ukraine, with the further improvement of the methodology of its implementation for increasing the efficiency in the system of financial security of local budgets. Methodology. For the purpose of substantiation of directions of financial decentralization development in conditions of hromadas self-sufficiency the following modern methods of research are used: historical, dialectical method of knowledge, system analysis, abstractedly-logical, graphic, statistical. The object of the study is the processes of development of financial decentralization through the prism of self-sufficiency of hromadas. The theoretical basis of this research is the fundamental provisions of economic theory, national economy, state and regional administration, and theory of local finance. Results. It has been proved that the most effective option is when the population residing in a particular territory takes part in the implementation of management functions in the region, which requires significant financial resources to ensure the implementation of management responsibilities. It is for this purpose that the process of decentralization, which is a complex and multi-component process connected with fiscal decentralization, was initiated in Ukraine. It has been substantiated that for further effective reform it is necessary to solve the issue of changes in the Constitution of Ukraine, as well as in the administrative organization of the country. Practical implications. It is determined that the keynote of fiscal decentralization is the principle of fiscal equivalence, when the efficiency of a particular hromada is achieved through such a mechanism of formation of revenues to local budgets that the end consumer of public goods at the local level will be financially responsible for expenses, as well as their order, volume and priority, within the limits of taxes transferred to them. The tax system bottlenecks of personal income were identified. It has been proven that the more freedom in setting the rates of local taxes and fees is given to local governments, the more there is an opportunity to set them at a level that will be suggested by local residents, because the hromada will demand at a high level of taxation a proper quality provision for their vital needs and, in addition, local government accountability.

Keywords: fiscal decentralization; taxes; fees; fiscal reform; amalgamated territorial community; budget; local authorities (search for similar items in EconPapers)
JEL-codes: H71 H76 M48 R51 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bal:journl:2256-0742:2021:7:4:23

DOI: 10.30525/2256-0742/2021-7-4-196-202

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