BUDGET POLICY

OPARIN Valerij ¹

¹SHEE “Kyiv National Economic University named after Vadym Hetman”
OrcID ID : https://orcid.org/0000-0002-5181-4333

Dominants and priorities of financial equalization in Ukraine

In the article the theoretical principles and practical problems of the financial capacity equalization of the administrative-territorial entities and settlements in order to ensure balanced development in Ukraine are investigated. It is defined the terminology that characterizes this component of financial policy. The author’s interpretation of the concepts of “financial equalization” and “fiscal regulation” is given. It is found that the dominant of financial equalization should envisage smoothing the gap in financial provision of regional needs and not just financial equalization based on territorial redistribution of incomes and resources. Two components of financial equalization are distinguished, such as a local initiative and national regulations. It is proved that local initiative, based on formation and implementation by relevant authorities of their own regional development programs, should be the initial component of financial equalization. It is substantiated the necessity of creating the regional development fund at the regional level rather than on the base of the state budget, as provided by updated version of the Budget Code of Ukraine. Potential sources of formation of the regional development fund and backgrounds of its usage are suggested. It is proved that properly reformed local taxation system, primarily in the form of a markup to national taxes, should be a precondition of regional development fund’ creation. In the context of regional development it is critically reviewed amendments to the Tax Code of Ukraine regarding the local taxation and inefficiency of the long-term policy of the tax burden reduction.

Keywords: financial equalization, fiscal regulation, budgetary transfers, regional development fund, local taxes and fees, local loans, investment grants.

JEL: H60, H61, H73, H74.

Oparin V. . Dominants and priorities of financial equalization in Ukraine / V. . Oparin // Фінанси України. - 2015. - № 6. - C. 29-43.