Financial equalisation in Ukraine: search for an efficient model

Volokhova Iryna S. ()
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Volokhova Iryna S.: Odessa National Economic University

The Problems of Economy, 2013, issue 4, 324_330

Abstract: The goal of the article lies in development of an efficient model of financial equalisation of income of territorial budgets, which would allow achievement of the maximum degree of accounting of needs of the population. The author considers advantages and shortcomings of various types of inter-budget transfers and shows the problems of financial equalisation in Ukraine. In the result of the study the article develops an economically more efficient model of financial equalisation for Ukraine, which would not violate sovereignty of consumers and stimulate bodies of local self-governance for accumulation of own income base. The article shows that common inter-budget transfers are the most optimal type of horizontal financial equalisation. In order to conduct it efficiently, it is necessary to achieve the balance between the financial needs of territorial units and their financial potentials, which are taken into account during financial equalisation. Equalisation grants are offered to be provided mainly by means of the funds that are transferred from the lower level budget into the higher level budget. Increase of the financial potential could be realised through attaching some of the state taxes, dues and mandatory payments to local budgets. The article justifies the necessity to reduce the degree of the financial equalisation. The author offers to provide target-oriented inter-budget transfers by objective criteria and only in the event of a necessity of stabilisation of cyclic fluctuations of economy and equalisation of income of the population. The considered issues are the basis for further deeper applied studies, connected with the necessity of conducting reforms of financial equalisation, for development of some legislative norms, which creates prerequisites for further system reformation of territorial finance in Ukraine.

Keywords: financial equalisation; inter-budget transfers; equalisation grants; subventions; fiscal gap (search for similar items in EconPapers)
Date: 2013
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