Personal income tax in the formation of budget revenues of united territorial communities

Abstract

The current problem of revenue formation of the budgets of united territorial communities is the search for sources of formation with high fiscal potential for financing public needs, mainly education, healthcare, infrastructure, etc. The high fiscal potential for the budgets of united territorial communities was characterized by the personal income tax, however, under martial law, additional threats and challenges were formed that require scientific research. The purpose of the study is to analyze the fiscal potential of the personal income tax in the formation of revenue of the budgets of united territorial communities, taking into account the proportions of the redistribution of personal income tax revenues between budgets of different levels and other norms of budget and tax legislation. Methods. In the process of research, the main theoretical provisions of the Ukrainian classical school of public finance were applied, which form a cause-and-effect relationship between the payment of taxes in the territory of the community and the receipt of public services. For the empirical analysis, a set of absolute and relative indicators of the fiscal potential of the personal income tax was used, formed on the basis of official data of the Ministry of Finance of Ukraine for 2018-2025. Results. The mechanism of redistribution of personal income tax revenues between budgets of different levels was studied and constant changes in proportions until 2016 were determined, as well as the constancy of proportions since the implementation of administrative reform and financial decentralization. An analysis of the fiscal potential of the personal income tax in the formation of budget revenues of united territorial communities was conducted, which is implemented through the inclusion of 60% of the tax paid on the territory of the community. The latest problems of the formation and use of the fiscal potential of the personal income tax in conditions of martial law and the general economic situation, regional asymmetries of development, etc. were identified. Conclusions. The latest problems of forming and using the fiscal potential of the personal income tax in the formation of revenues of the budgets of united territorial communities are the taxation of cash benefits, cash rewards and other payments received by military personnel and ordinary and commanding personnel, breaking the chain of public income - public expenditures through payroll taxation. It is proposed to launch a scientific discussion on improving the administration of the personal income tax with the formation of technical capabilities for crediting the paid tax to the budgets of communities where public services are actually received and returning the tax paid by military personnel to local budgets under alternative scenarios.