Financial decentralization in Ukraine: issues of legislative regulation

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Financial decentralization in Ukraine: issues of legislative regulation

Journal Title: Правова держава. Щорічник наукових праць (Pravova derzhava) - Year 2018, Vol 29, Issue

Abstract

The article substantiates the importance of financial decentralization for the effective decentralization of governance in the state. Financial decentralization is a significant component of the processes of decentralization of power, since it is designed to create the appropriate financial conditions for the performance of local government bodies by authorities. In fact, decentralization involves the simultaneous deployment of two processes: decentralization of power and financial decentralization aimed at ensuring the financial independence of local self-government bodies. All this stipulates the relevance of the study of legislative regulation of financial decentralization in Ukraine. The formation of the legislative provision of financial decentralization in the modern histo- ry of Ukraine is analyzed. It was clarified that the legal basis for the formation of the financial base of local self-government was formed in the Ukrainian legislation in the period of 1996– 1997. The basic legal acts containing the relevant norms include the Constitution of Ukraine, the Law of Ukraine «On Local Self-Government in Ukraine» 1997, The Law of Ukraine «On the ratification of the European Charter of Local Self-Government» 1997. However, the pro- cesses of financial decentralization that should ensure the financial capacity of local self-gov- ernment bodies have received real realities only at the end of 2014, with amendments to the budget and tax legislation. At the present stage of development we can assume that in Ukraine, the legal basis for financial decentralization was able to form. During 2014–2017, a number of normative legal acts were adopted, which in aggregate provided an opportunity to realize the law of local self-government, proclaimed in 1996–1997, for the formation of «adequate own financial re- sources» due to financial decentralization. Since then, a qualitatively new stage of financial decentralization has been launched through the expansion of the revenue part of local budgets through revision of the rates of deductions of individual national taxes and fees (including non-tax nature) to local budgets in the direction of increase, as well as the transfer of certain national taxes to the local level. However, in spite of the unequivocal positive results of the 2015 budget reform aimed at strengthening financial decentralization, it is necessary to consolidate the main criteria (indicators) of financial decentralization at the legislative level, to ensure its qualitative and quantitative assessment by establishing the share of local budget expenditures in the gross domestic product, the share of own revenues in the structure of local budget revenues, the share of local taxes and fees in the gross domestic product and the share of inter-budget fiscal transfers within local revenues structure. Also, in order to successful implementation of finan- cial decentralization, it is necessary to update the legislation regulating the activities of local self-government bodies, in particular by adopting a number of legislative acts – «On Local Self-Government in Ukraine», «On Local Authorities» and «On the Administrative-Territorial Arrangement».

Authors and Affiliations

Liudmyla Gorbaichuk

Keywords

financial decentralization local budgets budget revenues budget expenditures local self-government bodies inter-budget transfers

EP ID EP530907
DOI -
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