Petrenko A.O., PhD Izyumskaya V.A., Kostiv V.K.

Oles Honchar Dnipropetrovsk National University, Ukraine

THE CURRENT STATE OF INTERBUDGETARY RELATIONS SYSTEM IN UKRAINE

Today, in the context of economic transmutations there acquires particular topicality a matter to the improvement of the domestic system of interbudgetary relations, which, significantly, stipulates for the quality and realization speed of economic reforms started, as well as social stability both in the regions and the state as a whole.

The formation of sound interbudgetary relations system provides making the optimal conditions of making agree with interests between center and regions, the perception of the last not only as objects of influence, but as active participants and partners of many socio-economic and other processes both at national and international levels.

According to Article 81 of the Budget Code of Ukraine of 08.07.2010 N 2456-VI interbudgetary relations are relationships between the state, the Autonomous Republic of Crimea and local communities to ensure appropriate budgets with financial resources being necessary to carry out the functions envisaged by the Constitution and Laws of Ukraine [1].

The interbudgetary system is based on:

 – the distribution of expenditure responsibilities between different levels of the authorities;

– the equivalent to the distribution of revenue sources;

– balancing income and expenditure of all budgets through transfers.

One of the key benefits of the domestic system of interbudgetary relations that facilitates the process of budgetary decentralization is definition in the Budget Code of separation costs for fulfilling their own and delegated powers of local authorities in order to maximize the proximity of public services to their customers, as required by the principle of subsidiarity. At the same time, the significant drawback is that much of the functions assigned to the jurisdiction of local administrations, and not to local governments. Thus, the prospect of resolving this issue depends on the processes of transfer and not a significant part of the delegation of functions to local governments.

Of course, the practical extension of their functional responsibilities of local government can be realized only if providing them with an equivalent amount of their own powerful sources of income which are to be fastened by them on a regular basis. In this context, we can talk about another advantage of the studied system of relations that ensures the expansion volume of their own functional responsibilities of local governments – is the introduction of two baskets of income: those that are counted and those that are not counted in determining interbudgetary transfers.

However, the drawback is the uneven scope ratio of these income baskets and permanent increase of the transfers share in the revenues structure of local budgets. Thus, according to statistics it was equal to I quarter of each year: 42,1% in 2007, 42,0% in 2008, 44,6% in 2009 and 47,1% in 2010 respectively, attesting initiative reduction of local governments in mobilizing funds, finding reserves of filling local budgets [3]. In such situation, there is increasing a number of subsidized local budgets. In 2008, the share of the donor budgets in their total number is 6.3%, while the share of budget-recipients is 93.3%.

The perspective of strengthening the revenue base of local budgets is providing the status of local ones to those state taxes, which are traditionally fully credited to the revenue of local budgets (income tax of communal property, income tax, payment for land etc.).

According to European standards for ensuring regional financial autonomy in the structure of share transfers a bit of subsidies ought to exceed the subventions. On the one hand as non-purpose-oriented transfer subsidies enable local governments to make decisions about their spending trends pendently. On the other hand, this possibility is reduced to nothing because of the need to finance the lion's share of delegated powers.

 In such circumstances, for the local budgets there will increase volumes of subsidies that is to say purpose-oriented transfers. The finances tying down to specific tasks allows to accurately track trends and effectiveness of their use to estimate costs and outcomes [2].

The main advantage of applying formula approach to calculating the direct interbudgetary transfers is the transition from "manual" allocation of funds to establish an objective mechanism of their distribution, taking into account various aspects of socio-economic development. But practice shows that a formula approach to calculating the direct interbudgetary transfers also has some disadvantages. In particular, there is a discrepancy between the need of local budgets for additional capital and actually the received funds, which significantly worsens the financial condition of the settlement.

The solution of this shortcoming is a grouping of local budgets in terms of growth rate of their real income and the application of the differential index of relative fiscal capacity.

Hence, the system of interbudgetary relations is one of the most effective instruments of regulation of social and economic development not only in the regions, but also in the country of the whole. Today, as the experience of developed countries of the world attests, budgetary decentralization, expansion of functions and equivalent transfer of powerful sources of income to the local level really is an urgent task for Ukraine, whose solution will allow to improve the cooperation of local and central authorities, to form a financially self-sufficient regions, the central authorities to concentrate for solving strategic issues of national economy and, consequently, improve the lives and welfare of citizens.

Literature:

1. Budget Code of Ukraine of 08.07.2010 N 2456-VI. – [Electronic resource] – Mode of access: http://zakon.rada.gov.ua

2. Moldovan O.O. Budgetary decentralization: the experience of effective reform of Slovakia to Ukraine / O.O. Moldovan – [electronic resource] – Mode of access: http://www.niss.gov.ua/ content/articles/files/moldovan_book-47fc9.pdf

3. Shevchenko O.V. Performance Instrumentation of Budget and Tax Codes regarding financial support of regions / O.V. Shevchenko – [electronic resource] – Mode of access: http://www.nbuv.gov.ua/portal/soc_gum/en_oif/2010_7_5/42.pdf