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TAXATION OF INCOME OF PHYSICAL PERSONS AND LOCAL FINANCES: SURPRISES AND PERSPECTIVES OF THEIR SOLUTIONS

I. Lyuty and V. Ivaniuk
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I. Lyuty: Taras Shevchenko National University of Kyiv, Kyiv, Ukraine
V. Ivaniuk: Taras Shevchenko National University of Kyiv, Kyiv, Ukraine

Вестник Киевского национального университета имени Тараса Шевченко. Экономика., 2018, vol. 1(196), issue 196, 53-60

Abstract: The article proposes a comprehensive vision of the personal income tax system issues in the context of its use as a tool for the formation of local public finances, a systemic approach to increasing its effectiveness in the context of the need to balance the interests in the chains of the "individual–society" general system: "individual–local community," "the territory of the labor force supplier–the territory of the labor force recipient (scope of application of labor)," "the local community–the territory/sphere where social services are provided." A conclusion is drawn about the dominant fiscal function of the personal income tax and the tax on real property other than a parcel of land, which exhibits the constant growth of its tax rates without an acceptable extension of the preferential part. The process of transforming these taxes and their budget-forming role in the formation of the capable united territorial communities were investigated. The main issues of enrollment and distribution of income tax among the budgets of different territorial communities as subjects of the process of decentralization of public finances were revealed. The significant amount of work is required to assess the actual and potential capacity of the respective territories in order to provide the relevant services in the context of the entire array of the settlement network, which requires the development of a budget classification that would contribute to more detailed local budgets in developing a model for their distribution of profitable tax that would better take into account the parameters of the capacity of territorial communities, provision of their residents with the relevant services. The conclusion is made on the necessity of forming the preferential part of the mentioned taxes on the new conceptual principles, which provide for an extensive and effective system of tax incentives that would be provided to taxpayers, indirectly through the participation of the state, opportunities for obtaining education, treatment, introduction of energy-saving technologies, saving, investing in construction of housing, etc., and also formed the motivation for legalization of incomes as the basis for expanding the tax base, increasing budget formation of relevant taxes.

Keywords: personal income tax; local finances; public finances (search for similar items in EconPapers)
Date: 2018
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