Financial capacity of territorial communities in the context of evaluating the results of administrative and financial decentralization

Abstract

The article investigates the theoretical foundations of the financial capacity of territorial communities. Parameters of estimation of territorial communities’ financial capacity in the context of achievement of administrative-financial decentralization results are characterized. The necessity of improvement of criteria of territorial communities’ financial capacity is determined in terms of identification of sources of personal income tax, number of operating enterprises in the territory of the territorial community and the number of payers. Attention is paid to the need of improvement of the methodological basis for calculating the taxability index by taking into account the size of the able-bodied population, the median distribution of income tax per capita weighted by the population, and inclusion in the calculation of Kyiv city budget. The peculiarities of formation and use of financial resources of the territorial communities of Lviv and Poltava regions are clarified. The scientific and methodological approach to the evaluation of the financial capacity of territorial communities is improved by determining the priority of their expenditures, the interdependence of their own revenues and transfers with the financing of public services at the level of territorial communities. The directions of increasing the efficiency of functioning of territorial communities are outlined. Based on the assessment of the interdependence of the amount of generated financial resources and the financing of public services at the level of the territorial communities of Poltava region, it is determined that the growth of own revenues should be ensured for their proper functioning, first of all, through efficient use of their own financial and economic potential; parity in the ratio of economic and social expenditures in order to generate long-term positive effects of socio-economic development of territorial communities; diversification of functional expenditures for comprehensive provision of public services at the level of territorial communities.