Financial independence of local self-government bodies in Ukraine: problematic aspects of ensuring and ways of strengthening

Tolkmitt Volker
Doctor of Economics, Professor for Financial and Risk Management, Hohschule Mittweida ‒ University of Applied Sciences, Germany, e-mail: tolkmitt@hs-mittweida.de

Ignatenko Ruslana
PhD in Economics, Odessa National Economic University, Ukraine, e-mail: lanavladi6@gmail.com, ORCID ID: https://orcid.org/0000-0001-8492-2587

Cite this article:

Tolkmitt, V., & Ignatenko, R. (2024). Financial independence of local self-government bodies in Ukraine: problematic aspects of ensuring and ways of strengthening [Finansova samostiinist orhaniv mistsevoho samovriaduvannia v Ukraini: problemni aspekty zabezpechennia ta shliakhy zmitsnennia], Socio-economic research bulletin, Vìsnik socìal’no-ekonomìčnih doslìdžen’ (ISSN 2313-4569), Odesa National Economic University, Odessa, No. 1-2 (88-89), pp. 103-113.

Abstract

The article is devoted to the study of the peculiarities of the formation of financial resources of local self-government bodies (LSGBs). The authors analyzed the dynamics of revenues of local budgets in Ukraine over the last five years and also determined the role of inter-budgetary transfers in their structure. The article provides a comparative analysis of the Ukrainian tax revenue structure of local budgets with the corresponding structure of the countries of the Organization for Economic Co-operation and Development (OECD). All this allowed the authors to determine the actual problems of the low level of financial independence of LSGBs and the financial decentralization carried out in Ukraine. The authors have developed a number of measures related to expanding the financial capabilities of local governments, as well as increasing the share of own financial resources in the revenue bases of the local budgets of Ukraine. It was established that in order to strengthen the financial independence of local authorities, it is necessary to increase the role of local taxation and administration. The authors substantiated that the solution to the revealed problems is also possible under the condition of attracting external funding by territorial communities through the activation of financial aid programs. The conclusions formulated by the authors emphasize the need to increase the own financial resources of local budgets to ensure the financial independence of local self-government bodies, and also indicate the relevance of further research in this direction in order to support economic growth and social development of territories by deepening the degree of financial decentralization.

Keywords

financial resources; local self-government bodies; local budget revenues; financial independence; local taxes and fees; tax authority.

JEL classification: H200; H210; H700; R510; DOI:https://doi.org/10.33987/vsed.1-2(88-89).2024.103-113

UD classification: 336.1:352

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

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