TAX POLICY

SOKOLOVSKA Alla ¹, RAINOVA Larysa ²

¹SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0002-1022-8215
²SESE "The Academy of Financial Management"
OrcID ID : https://orcid.org/0000-0002-8275-3094

Instruments of the fiscal consolidation policy and their impact to macroeconomic processes

The essence of the fiscal consolidation policy and its instruments in the narrow and broad sense as well as the features of its implementation in the EU in terms of overcoming the consequences of 2008-2009 crisis was analyzed. The negative impact of fiscal consolidation to economic growth, employment, level of labor and capital income, as well as dependence of its effects from the applied instruments and the period of its action was justified considering results of the western scientists’ researches. Particularly it was determined that decreasing of government spending leads to less negative macroeconomic consequences than tax increasing. Moreover, fiscal consolidation policy instruments that do not impede economic growth, consist of shifting the tax burden from the labor taxes to environmental taxes, taxation of consumption and real estate; improvement of tax compliance; changes in the structure of public expenditures in the direction of reduction of unproductive expenditures and increase of productive ones; more efficient use of public funds. It was founded that one of the most effective instruments to provide efficient use of budgetary funds in Ukraine may became realization of number of measures on the public administration improvement and struggle with corruption that will increase the rate of economic growth even without increasing governmental spending. It was justified that currently reserves in Ukraine are almost exhausted based on the fact that the fiscal consolidation due to increase of budget revenues is possible only in case of relatively low initial level of the tax burden in total and by separate taxes, the rates of which should be reviewed, and the absence of ""tax fatigue”. In the context of limited possibilities for searching tax sources of fiscal consolidation, which would not have a negative impact on economic growth in Ukraine, the main measures of its realization in the field of governmental revenues were substantiated.

Keywords: fiscal consolidation, tax and budgetary instruments of fiscal consolidation, the macroeconomic effects of fiscal consolidation.

JEL: H21, H30, H87

Sokolovska A. . Instruments of the fiscal consolidation policy and their impact to macroeconomic processes / A. . Sokolovska, L. . RAINOVA // Фінанси України. - 2014. - № 4. - C. 61-82.