“Development trends of local taxes in the system of local budgets in Ukraine”

Effective system of local self-government is a key to the successful development of a democratic state. It should be aimed at ensuring the effective performance of functions by the authorities, creating environment for obtaining quality services by citizens, and introducing and expanding the system of local taxes. Local taxes make the financial basis for the activities of local self-government bodies. However, nowadays, the lack of their volume and revenue instability are considered as a matter of national concern. Funding of state delegated powers, which is mainly due to transfer payments, is characterized by the delayed receipt of revenues and the lack of revenue in terms of targets, thereby creating problems with financing from local budgets. The article investigates the essentials of local taxation in the system of local budgets in Ukraine. It also summarizes methodological approaches to determining the nature of local taxes, clarifies their fiscal role in the local tax system and local budgets, and analyzes the existing practice of formation and implementation of local taxes in local budget revenues. Besides, prospective lines of improvement of the local taxation sys-tem are investigated and recommendations for its development are elaborated. Also, the subject to reform of the system of tax and budgetary relations was substantiated; changes in some administration mechanisms, the list expansion due to environmental fees and strengthened control over the unshadowing of small and medium businesses were offered.


INTRODUCTION
Establishment and development of the Institute of local taxes and fees characterizes the economic culture of the territories functioning, which, in the context of democratization of all processes in Ukraine, should be aimed at ensuring the rights and freedoms of citizens in terms of establishing local taxes and fees, considering their immediate interests.
Local taxation and its problematic aspects and development trends stay relevant in the context of administrative-territorial reform and decentralization in Ukraine.Economic independence of any community is not conceivable without having sufficient financial resources, relative autonomy in managing taxes and other mandatory payments coming to the relevant local budget.
Decentralization in Ukraine has fostered the extension of local selfgovernment powers; however, there is a need to ensure a sound financial framework, mainly through local taxes.Thus, the necessary precondition for the development of a democratic state is the creation of an effective system of local self-government, whose activity is related to ensuring the effective performance of functions by the authorities, creating conditions for obtaining quality services by citizens, and improving and developing the system of local taxes.

THEORETICAL BACKGROUND
Many Ukrainian scientists have considered development of the Institute of Local Taxation.
In particular, Lopushynskyi (n.d.), Prots (2016), and Chernovska (n.d.) investigated the nature and economic content of local taxes and fees.Volokhova (2014) and Demianyshyn (n.d.) considered the essence of the tax mechanism of local taxation and the theoretical foundations of its introduction.Hlushchenko (2013), Vasylieva (2018), and Kaziuk (2012) focused on particular aspects of financial support for the development of administrative and territorial units due to the development of the local taxation system.Contemporary issues of local tax administration in foreign countries were considered by Buchanan (2004) and Bukina (2009).
Unlike Volokhova (2014a) and Demianyshyn (n.d.), who only considered the essence of the tax mechanism of local taxation and theoretical bases of its introduction, as well as Vasylieva (2018) and Kaziuk (2012), who focused on particular aspects of financial support for developing administrative and territorial units through the of local taxation development, this study has identified the role of local taxes (fees) in the tax system to create an effective mechanism for administering them, aimed at increasing local budget revenues and proper territorial development.
The problems of scanty share of local taxes and fees in the consolidated budget of the state, low financial autonomy, lack of effective incentives, have not been sufficiently investigated in the Ukrainian scientific literature.All this has a negative impact on the economic and social development of communities.
Therefore, it is important to improve the local tax administration mechanism aimed at increasing revenues, introducing effective types of local tax-es, which will facilitate the proper development of territories.
The purpose of the study is to analyze the essentials of administering local taxes, to determine their role in the functioning of the local budget revenue system as a financial basis for ensuring the activities of local governments.

RESEARCH FINDINGS
Local budgets play an important role in the budgetary system of the state, since they make the financial basis for ensuring the activities of local authorities.
The institute of local taxes and fees forms the legal regulation of the procedure for establishing taxes, which characterizes the economic culture of the functioning of the territories.When considering the economic nature of local taxes, one should focus on the role of local taxes in the functioning of the tax and budgetary systems, which is to perform the fiscal, regulatory and control functions (Kucheriavenko, 2010).Fiscal function is ensured through the formation of local funds for undertaking local government powers.According to J. Buchanan, fiscal justice must be based on the fact that regional differences in the provision of public goods and tax burden can lead to inefficient movement of production factors (Buchanan, 2004).The regulatory function is the ability to influence local taxpayers by setting their rates.The control function is to exercise control over the establishment, formation, mobilization and distribution of local taxes (fees) in the respective budgets by the relevant authorities.
Given functioning of local taxes in historical retrospect, it should be noted that their list has changed substantially based on changes in the legal framework.In particular, before the Tax Code was adopted, the Law of Ukraine "On the Taxation System in Ukraine" and the CMU Decree "On Local Taxes and Fees" made the basis of the legislative base.They consisted of 16 types -two local taxes and 14 fees (The Verkhovna Rada of Ukraine, n.d.b).Since 2010, with the Tax Code adoption, the list of local taxes and fees is changing.These include two new taxes (real estate tax other than land and single tax) and three fees (fee for carrying out some business activities, parking fees for vehicles, and tourist tax), as well as two taxes (property tax and single tax) and two fees (parking fees for vehicles and tourist tax) from 2015.Currently, their structure is as in Figure 1.
The World experience indicates a steady increase in local budgets, with local taxes being the main source of revenue; and in foreign countries, their number is higher compared to Ukraine.The amount of local taxes is 45 in Germany, 50 taxes in France, 70 taxes in Italy and 100 taxes in Belgium (Bukina, 2009).
Local budget revenues in many countries can be divided into taxes distributed between central governments and local governments and taxes related to local governments (see Figure 2).
The experience of France and Japan may be interesting for Ukraine, in particular, the right of the local authorities of France to impose other tax-es, in particular, charges for electric lighting and cleaning of territories, for the development of mines, vehicle duties, the development of fields, etc. (Pasternak, n.d.).Local tax rates are regulated at maximum by local authorities during the drafting of the budget for the coming year (in accordance with the Act of the National Assembly of the French Parliament).
The Law of Japan On Local Taxes provides for the application of rates above the upper limits within the list defined by the law (Kalustian, 2013, p. 202).New taxes may be introduced with the permission of the Home Secretary, provided that they do not interfere with trade or duplicate other taxes.Local taxes and fees are involved in GDP redistribution and thus influence socio-economic development of regions and local authorities in performing their functions.The share of local taxes in GDP, consolidated and local budget revenues (see Figure 3) is the indicator of the fiscal aspect assessment.
There is a decrease in the fiscal effect of local taxation for 2017-2018.This is primarily due to the reduction in the amount of local taxes and fees and changes in the way they are calculated.There are also problems of access of local self-government bodies to the State Register of Proprietary Rights to Immovable Property, which complicates their administration and weakens the means of administrative influence on completeness and timeliness of their payment by payers.
Given the dynamics of the structure of actual local tax revenues in Ukraine, the study concludes the following (see Table 1).
During the period under review, the structure of local taxes and fees did not change significantly.
Local fees, such as vehicle parking fees and tourist fees, account for a small portion of this structure.
The charge for the first registration of the vehicle (nationwide payment) went before the parking fee for vehicles.
Practice shows that local authorities do not use the opportunities to control it; they do not install parking lots, do not keep records of land and do not monitor the relevant agreements, which reduces the amount of its revenue.Unshadowing and change of the tourist services base will increase the fiscal result of the tourist tax.Its mechanism should take into account fiscal reserves.Uniform tax is important and regressive.
A simplified tax system allows replacing individual taxes and fees with a uniform tax while maintaining simplified accounting and reporting.By 2014, it was based on six taxpayer groups.They current-   Increased minimum wage to UAH 3,200 from January 1, 2017 contributed to more than twofold increase in tax payments compared to the corresponding last-year period for the second group payers.This situation led to the cessation of economic activity of some business entities and consequently to job reduction.Uniform tax is a stable source and regulatory tool, but local governments do not have a significant impact on its administration.
Given the above, it is necessary to amend the legislation on bringing the first and second group payers on an equal footing.Besides, to increase the income, it is essential to index the marginal income of individual entrepreneurs due to an increase in consumer prices in the period from 2015 to 2018 by almost 80%.
Finally, property tax makes the most significant proportion; it is an incentive for the owners to use the property effectively, a stable source of revenue and leverage for the territory development, an instrument of income unshadowing, an incentive to maximize profits, etc.However, it has the disadvantages, in particular, increased risk to the payer, regressiveness, difficult administration, and economic distortions (see Figure 4).
Figure 4 concludes that all taxes except for transport tax tend to increase.Land rent is significant in the tax structure; it is calculated on the basis of an agreement between the lessor (owner) and the tenant, which determines the amount of rent payment terms established by the lease.The amount of the land tax depends on both the land plot monetary valuation and the rate and area of the land plot provided.Therefore, the completeness of its revenues depends on the success of the reforming land relations, including the reduced number of objects and categories of preferential taxation.
The problem with the mobilization of property taxes other than land is the lack of good property assessment, which causes budgets to suffer losses.
As already mentioned, the list of the State Register of Real Property Rights is not complete.There exist problems with the preferential tax mechanism (the size of the tax exemption area is overstated and should be reduced), which will be a fair ap-  proach to granting benefits.Residential property taxation is a problem in terms of administration and is unpopular among taxpayers.
A new tax, a transport tax, appears in the Tax Code.It is implemented in accordance with global requirements.Transport tax has some disadvantages, such as the tax burden on taxpayers and the narrow tax base.It is better to direct tax revenue to the spread of low carbon vehicles to improve the environment.
Thus, the principles of local tax reform should be the following: discretion avoidance, in particular the use of coefficients -opportunities for corruption; calculating property tax by bringing the asset price to market level based on transparent mechanisms.

CONCLUSION
The research has made it possible to state that the effectiveness of the local government system is directly related to ensuring the efficient performance of functions by the authorities, creating conditions for citizens to receive quality services, and introducing and extending the local tax system.The study also proposes to develop the system of local taxes by changing their administration mechanisms (creating equal conditions for uniform taxpayers of the first and second groups to index the marginal volume of income of individual entrepreneurs by increasing consumer prices).The growth in local tax revenues can be ensured through the installation of ATMs, accounting of land parcels and monitoring of relevant agreements, unshadowing and changing the tourist services base.The budgetary policy aimed at considering the interests of the state, local self-government bodies, legal entities and taxpayers should be improved, the list of taxes set by local governments should be expanded, and new local taxes (fees), in particular, electric lighting and site cleaning fees, should be established.

Figure 1 .
Figure 1.The structure of local taxes (fees) in Ukraine

Figure 2 .
Figure 2. List of taxes belonging to local authorities

Figure 3 .
Figure 3. Changes in the share of local taxes of Ukraine in 2016-2018 Source: Tsina Derzhavy [Value of the State] (n.d.).

Figure 4 .
Figure 4. Changes in the structure of property tax receipts to local budgets of Ukraine for 2016-2018, UAH mln The Verkhovna Rada of Ukraine, n.d.) is one of the main legislative acts regulating the functioning of local finance.Besides, the implementation of the Tax Code has favored reforming the local tax system, including the abolition of inefficient local taxes and fees and changes in the procedure for calculating them.Article 69 of the Tax Code stipulates that local governments establish local taxes and fees that are credited to the respective local budgets in accordance with the procedure established by the Budget Code of Ukraine, taking into account the features set out in the Tax Code of Ukraine (The taxes and fees should form part of the revenue base of local budgets, for which the central administration has no authority.These funds must be the property of local self-government, which they rely on when performing their tasks and functions (Chernovska, n.d., p. 537).
Verkhovna Rada of Ukraine, n.d.a).Given the constant changes in the budget classification of revenues in the local taxes category, in particular, until 2015, they were called local taxes and fees.Now, according to the classification of the budget and provisions of the Tax Code, they are called local taxes.This study, using the category of local taxes, analyzes all its components, in particular, taxes and fees.According to paragraph 8.3 of Article 8 of the Tax Code of Ukraine, local taxes and fees include: taxes and fees, established in accordance with the list and within the scope of boundary rates determined by this Code, decisions of village, settlement, city councils and councils of united territorial communities, created in accordance with law and perspective plan for forming territories of communities within their powers and that are obligatory for payment in the territories of the respective territorial communities (The Verkhovna Rada of Ukraine, n.d.a).territory of the respective administrative-territorial unit (villages, settlements, cities or associations of villages) and which are credited to its local budget(Lopushynskyi, n.d.).Chernovska points out that local list of local taxes is regulated by Article 10 of the Tax Code, which states that local councils set a (1)perty tax and a uniform tax (as regards transport tax and land payments).Real estate tax other than land, parking fee, and tourist tax are established based on the existing tax base.http://dx.doi.org/10.21511/pmf.08(1).2019.09

Table 1 .
Structure of local taxes and fees, % Source: Tsina Derzhavy [Value of the State] (n.d.).account for four.Since 2018, local budgets account for 100% of the uniform tax paid by farmers compared to 86% in previous years.It should be noted that with the adoption of the Draft Law of Ukraine No. 5132 On Amendments to the Tax Code of Ukraine on Balancing Budget Revenues in 2017, certain changes have occurred (par.293.1 and par.293.2).Taxpayers from the first group pay uniform tax in the percentage (flat rate) of the subsistence level set for able-bodied persons as of January 1 of the reporting year.The second group payers pay it according to the size of the minimum wage.It is believed that this approach is unfair and violates the tax legislation principles.
Note: * Fee for implementing specific types of business activities has been abolished since January 1, 2015.ly