Money, finances and credit

Fiscal decentralisation in Ukraine: declaration and practical implementation

Economic Annals-XXI

Economic Annals-ХХI: Volume 161, Issue 9-10, Pages: 79-84

Citation information:
Lopushniak, G., Lobodina, Z., & Lyvdar, M. (2016). Fiscal decentralisation in Ukraine: declaration and practical implementation. Economic Annals-XXI, 161(9-10), 79-84. doi: https://doi.org/10.21003/ea.V161-18

View Full-TextDownload PDF

Galyna Lopushniak
D.Sc. (Economics),
Professor,
UTP University of Science and Technology in Bydgoszcz
7 Al. prof. S. Kaliskiego Str., Bydgoszcz, 85-796, Poland
lopushnyakgs@ukr.net

Zoryana Lobodina
PhD (Economics),
Associate Professor,
Ternopil National Economic University
11 Lvivska Str., Ternopil, 46000, Ukraine
z.lobodina@tneu.edu.ua

Martha Lyvdar
PhD (Economics),
Associate Professor,
Lviv Polytechnic National University
12 Bandera Str., Lviv, 79000, Ukraine
m.luvdar@gmail.com

Fiscal decentralisation in Ukraine: declaration and practical implementation

Abstract. Introduction. Negative effects of the global economic crisis, contradictions of social and economic policies of Ukraine caused by insufficiently effective reforms and frequent changes in Ukraine’s legislation have led to numerous problems in the field of budgetary relations, including the excessive centralisation of budget funds, increasing public debt, insufficient provision of sources of real income for delegated local authorities, etc. These problems can be solved by means of the declared fiscal decentralisation. Its implementation will help to strengthen the financial basis of the local self-government, improve the social and economic situation and provide an increasing number of jobs and decreasing migration.

The purpose of the paper is to evaluate the process of fiscal decentralisation and the changes, caused by it in relationships between budgets due to the delineation of expenditure responsibilities and sources of income in order to compare the obtained and expected results.

Results. The main disadvantages of fiscal and tax reforms have been defined as follows: rapid implementation without proper substantiation and preparation; incomplete sectoral reforms and administrative-territorial reform that would precede the budgetary reform; increasing centralisation of budgetary funds despite the declared fiscal decentralisation; the handover of power from public authorities to local authorities without proper financial provision. In order to implement real fiscal decentralisation it was proposed to provide conditions for people’s active self-fulfilment when they set up their own business, promoting the increase of revenues into the budget; to ensure the delegated rights on expenditures of the amount of designated financial resources alongside with the handover of power from public authorities to local authorities; to improve the order of calculation of basic (reverse) dotation with the possibility of its adjustment due to the objective circumstances; to review the revenues of the local budgets in order to increase local revenues and reduce transfers from the state budget.

Conclusions. Having conducted this research, a conclusion was drawn about insufficient effectiveness of the budget and tax system reforming, intergovernmental fiscal relations and declarative nature of many activities of fiscal decentralisation.

Keywords: Fiscal Decentralisation; Reform of Intergovernmental Relations; Budget Revenues; Intergovernmental Transfers; Taxes; Budget Expenditures

JEL Classification: H61; Н71; Н72

DOI: https://doi.org/10.21003/ea.V161-18

References

  1. Demianyshyn, V. (2008). The theoretical conceptualization and practical implementation of fiscal doctrine in Ukraine. Ternopil: TNEU (in Ukr.).
  2. Zapatrina, I. (2007). Budget mechanism of economic growth. Kyiv: Institute of socio-economic strategy (in Ukr.).
  3. Lyutyi, I., & Kravhenko, M. (2014). The global economic crisis: threats and risks in the operation of public finances. Ekonomika ta derzhava (Economy and State), 7, 24-27 (in Ukr.).
  4. Yurii, S., Fedosov, V., & Alekseienko, L. (2008). Finance. Kyiv: Knowledge (in Ukr.).
  5. Yurii, S., Demyanyshyn, V., & Kyrylenko, O. (2013). The budget system. Ternopil: TNEU (in Ukr.).
  6. Bogolib, T. (2016). Budgetary system of Ukraine: a new reality and global challenges. Economic Annals-XXI, 156(1-2), 41-43.
    doi: https://doi.org/10.21003/ea.V156-0009 (in Russ.)
  7. Buturlakina, T., & Minkovych T. (2010). Fiscal decentralization as a factor of economic growth in the regions. Naukovyi visnyk Uzhhorodskoho universytetu (Scientific Herald of Uzhhorod University), 31, 237-244 (in Ukr.).
  8. Lysyak, L. (2009). The budget component of the implementation dominant trends of public development. Kyiv: DNNU AFU (in Ukr.).
  9. Lunina, I. (2006). Public finance and reform of intergovernmental relations. Kyiv: Naukova dumka (in Ukr.).
  10. Lunina, I. (2014). Budget decentralization: the goals and directions of reforms. Ekonomika Ukrainy (Economy of Ukraine), 11(636), 61-75 (in Ukr.).
  11. Chugunov, I., & Makogon, V. (2016). Budget policy under economic transformation. Economic Annals-XXI, 158(3-4(2)), 66-69.
    doi: https://doi.org/10.21003/ea.V158-15
  12. Blankart, S. (2000). Public finance in democracy: introduction to financial studies (Trans. from German). Kyiv: Lybid (in Ukr.).
  13. Buchanan, J., & Musgrave, R. (1999). Public Finance and Public Choice: Two Contrasting Visions of the State. Cambridge, Mass.: MIT Press.
  14. Vagner, A. (1993). Theory of finance. Lviv: Petrokom (in Ukr.).
  15. Keynes, J. (1993). Selected works. Moscow: Economics (in Russ.).
  16. Samuelson, P., & Nordhaus, V. (2010). Economics. Moscow: Williams (in Russ.).
  17. Shakhova, G. J., Kradynov, P. G., & Manenok, P. L. (2012). Long-term sustainability of the budgetary system. Financial Journal, 4, 5-18 (in Russ.).
  18. Kulawik, J. (2016). Fiscal federalism versus rural development. Problems of Agricultural Economics, 3(348), 41-66.
    Retrieved from http://yadda.icm.edu.pl/yadda/element/bwmeta1.element.desklight-c2762dbb-8fe8-482b-a27a-bc57bffe4719/c/Kulawik.pdf
  19. Bywalec, G. (2012). Dilemmas of decentralization in the modern world. National economy, 255-256(11-12), 123-145.
    Retrieved from http://gospodarkanarodowa.sgh.waw.pl/p/gospodarka_narodowa_2012_11-12_06.pdf (in Pol.)
  20. Decentralization: great dictionary of modern Ukrainian language (2005). Kyiv; Irpin: Perun (in Ukr.).
  21. The Verkhovna Rada of Ukraine (2016). Budget Code of Ukraine.
    Retrieved from http://zakon5.rada.gov.ua/laws/show/2456-17 (in Ukr.)
  22. The Verkhovna Rada of Ukraine (2016). Tax Code of Ukraine.
    Retrieved from http://zakon3.rada.gov.ua/laws/show/2755-17 (in Ukr.)
  23. The Cabinet of Ministers of Ukraine. (2016). Decentralization. Local budgets of 159 joint communities. The first half of 2016, financial and analytic materials.
    Retrieved from http://decentralization.gov.ua/pics/attachments/Monitoriing_OTG.pdf (in Ukr.)
  24. The State Treasury Service of Ukraine (2016). Reporting on budget execution (Law of Ukraine).
    Retrieved from http://www.treasury.gov.ua (in Ukr.)

Received 4.10.2016

View Full-TextDownload PDF
In, , , , , ,

More Papers