Ruban M. Tax revenues in the system of the local budgets’ revenues formation

The author has developed the methodological principles for assessing the local budgets’ tax potential in fiscal decentralization. The tax instruments' role – as a system of fiscal mechanisms for filling the budget – for the general regional development is described. The statements on the territorial tax potential’s assessment based on an additive model, combining the local taxes and fees' potentials, are proposed. The growth potential for the revenues associated with personal income tax, real estate tax other than land, land tax and rental, and flat tax has been studied. The implicit rate of personal income tax in Ukraine (in general) and in Kyiv (in particular) was evaluated; the certain features and reasons for the differentiation between the above values were critically identified. The personal income tax’s impact on the economic growth peculiarities under the conditions of proportional redistribution between the state and the local budgets have been identified. The approaches to increase the tax revenues fiscal efficiency in the sub-national budget revenues system have been developed. The main directions for the administrative-territorial units’ budgets’ financial capacity strengthening were determined as well. The analysis of the factors influencing the tax revenues’ forecasting efficiency was carried out. The statements on the quality improvement in the tax administration have been formulated as well. The ways to expand the bases of the taxes assigned to the local budgets were substantiated. The regional tax potentials’ optimization in terms of the local budgets empowerment by a sufficient fiscal decentralization degree, without deepening the unfavorable differentiation in social and economic development between the actual country’s units and individual administrative entities (within the regions mentioned above) could intensify the endogenous economic growth processes; the administrative-territorial division should be rationalized in order to reduce the transaction costs of financial management. The impact of fiscal decentralization instruments on the real gross domestic product’s dynamics has been assessed. As a possible solution to induce the local self-governments’ financial capacity and maintain the current tax system’s structure simultaneously, some essential improvements in the approach to splitting the revenues from the national taxes between the state and the local budgets can be regarded as an alternative to the decentralization.