Abstract
The main strategic task of modernizing the system of public administration and territorial structure of power should be the creation of effective local selfgovernment, creating comfortable living conditions for citizens, providing them with high quality and affordable public services. Economically active businesses, a sufficient number of skilled workers, developed industrial and social infrastructure are the basis for successful community development. The society still lacks effective financial mechanisms to motivate local governments to the effectiveness of decisions on socio-economic territorial development. Given this, the article analyses the current financial problems of decentralization in Ukraine, the impact of national economic development and budget policy on the financial capabilities of local governments. Conceptual directions and resources for increasing the financial independence of the regions have been identified. It is established that the main result of the budget decentralization reform should be not so much more efficient allocation and redistribution of community financial resources, as greater interest and capacity of local governments to increase local budget revenues, find reserves, and improve the efficiency of tax administration and fees. Local self-governments must make decisions based on the following cause-andeffect relationship: the availability of sufficient resources in local budgets is a consequence of the level of economic activity in the region.
Highlights
The main strategic task of modernizing the system of public administration and territorial structure of power should be the creation of effective local selfgovernment, creating comfortable living conditions for citizens, providing them with high quality and affordable public services
It is established that the main result of the budget decentralization reform should be not so much more efficient allocation and redistribution of community financial resources, as greater interest and capacity of local governments to increase local budget revenues, find reserves, and improve the efficiency of tax administration and fees
Often the literature and official reports of public authorities distort the data, and show a rapid increase in local budget revenues due to the reform (Fig. 3 and 4). Such data are published on the official website of the Ministry of Finance of Ukraine «Decentralization» portal, which is devoted to the problems of financial decentralization in Ukraine (Decentralization Project)
Summary
Indicators of local budgets (structure and dynamics of revenues, expenditures) reflect the general state of socio-economic development of the territory, its potential. Ukraine’s decentralization process began in 2014 with the adoption of the Concept of Reforming Local Self-Government and Territorial Structure of Power in Ukraine (Order of the Cabinet of Ministers of Ukraine No 333-р, 2017), Laws of Ukraine «On Voluntary Amalgamation of Territorial Communities» (Law of Ukraine No 157-VIII, 2015), «On Cooperation of Territorial Communities» (Law of Ukraine No 1508-VII, 2014), as well as changes to the Budget and Tax Codes of Ukraine (Law of Ukraine No 2456-VI, 2010; Law of Ukraine No 2755-VI, 2010) that concern financial decentralization This process made it possible to form the institution of local self-government at the base level – amalgamated territorial communities (hereinafter – ATCs) – in accordance with the provisions of the European Charter of Local Self-Government. The growth of household income is a consequence of the growth of the country’s GDP in general and gross regional product in particular
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