FISCAL RISKS OF SUMY CITY BUDGET EXECUTION IN CONNECTION WITH COVID-19

Abstract

The article analyzes the revenues of the budget of the city of Sumy and examines the impact of the COVID-19 pandemic on the dynamics of tax revenues of local budgets in 2020. Based on the analysis of local budget revenues, the share of local budget revenues in the Consolidated Budget of Ukraine, and the share of local budget revenues in GDP, it was found that the decentralization reform has increased the independence and financial adequacy of local budgets, but the budget system of Ukraine remains highly centralized. The article analyzes the actual budget revenues of Sumy. It showed the presence of an annual increase in the absolute amount of revenues, but the growth rate of own revenues of the city budget decreased annually during 2017-2019. It is determined that despite the progress made in ensuring the independence and fiscal adequacy of local budgets, the new risks that arose in 2020 in connection with the COVID-19 pandemic and the introduction of quarantine restrictions have worsened the situation at all levels of the budget system and posed significant threats to the implementation of budget targets and maintaining their balance. The general decline in business activity of business entities, rising unemployment and the transition to part-time employment, restrictions on tourism activity have led to a significant reduction in expected revenues from personal income tax, single tax, tourist tax. An additional negative impact on the actual revenues of local budgets was the introduction of legislative initiatives on temporary exemption from taxation and the establishment of other tax benefits, including benefits for the payment of personal income tax; exemption from accrual and payment of land tax in March 2020 and deferral of payment for April 2020; tax holidays for real estate tax; changes in income margins and single tax rates, etc. Given the weakness of the revenue base of most local budgets, it is proposed to implement such measures only taking into account the need to maintain the adequacy of local budgets and minimize the negative consequences of fiscal risks. On the other hand, more effective management of local budget funds, balance and rationality in the use of available financial resources are becoming important.