THE TAX CHANGES IMPACT ON THE MUNICIPAL BUDGETS REVENUES IN UKRAINE

Abstract

The purpose of the study is to assess the consequences for the financial capacity of the budgets of territorial hromadas (THs) from changing approaches to personal income tax (PIT) allocation. The methods of micro-modeling of the taxpayers were used, which integrate official demographic and financial data, representative population surveys data at the level of individual typical THs, and structured in-depth interviews information. The main aspects of the employment of TH residents and the peculiarities of their personal income tax payments were considered. It has been established that there are significant gaps between the place of residence, work, and payment of taxes. In three-fourths of the examined THs, more than half of the employees worked outside the municipalities, that is, personal income tax did not go to the place where the employee lives, uses infrastructure, and receives public services. This is especially characteristic of suburban THs, where a high concentration of pendulum labor migration to the neighboring city is registered. Estimated losses of TH budgets from informal employment and "shading" of wages. The study results revealed the ambiguity of the impact of the change in the approach to PIT share crediting to the budgets of municipality where taxpayer live. Significant tax capacity strengthening is expected in rural subsidized and most suburban rural THs. Economically active THs will not necessarily benefit from such changes. An alternative model providing for the PIT share splitting between the THs where taxpayers live and the THs where they work may turn out to be more compromised and fairer for Ukraine. The main problems of information support at the local level for the needs of monitoring, modeling, and management decision-making are highlighted. A conclusion was made about the prospects of using information from e-registers for these needs, and a list of them was determined.