№ 4/2017

Fìnansi Ukr. 2017 (4): 42–54

BUDGET POLICY

VOZNYAK Halyna ¹

¹SІ “Institute of Regional Research named after M. I. Dolishniy of the NAS of Ukraine”
OrcID ID : https://orcid.org/0000-0003-2001-0516

Fiscal equalization: theoretical and methodological aspects

The paper studies the theoretical and methodological foundations of the fiscal equalization of the financial capacity of the regions to ensure their sustainable, balanced development. The author considers and unifies the terms that characterizes the fiscal policy of regional development, namely “intergovernmental fiscal relations”, “fiscal adjustment”, “fiscal equalization”. The basis for an in-depth study of the essence of fiscal equalization is the structural and logical scheme of the system of intergovernmental fiscal relations proposed by the author, which allowed to reveal the content of this concept and conclude that the notion of “intergovernmental fiscal relations” is broader than “fiscal adjustment”, and fiscal equalization is its task. It is shown that financial equalization has regional specifics and is aimed at balancing out regional development. The author describes fiscal equalization models and critically evaluates budget alignment tools. It is proved that targeted transfers are not an effective means of equalization as they restrict local governments’ free choice of budgetary policy, and therefore preference should be given to non-targeted subsidies. Besides, it is proved that loans are a more important source of financing, especially of capital expenditure and, consequently, the development of regions than the interest deductions to local budgets from state taxes.

Keywords:fiscal equalization, fiscal regulation, intergovernmental fiscal relations, local budgets, transfers, regional development.

JEL: H60, H73, H74.

VOZNYAK H. . Fiscal equalization: theoretical and methodological aspects / H. . VOZNYAK // Фінанси України. - 2017. - № 4. - C. 42-54.

Article original in Ukrainian (pp. 42 - 54)

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