Formation of Self-Sufficient Wealthy Territorial Communities in Ukraine: State, Problems and Prospects

Abstract

The aim of the article is studying the current state of the formation of wealthy territorial communities in Ukraine, identifying the main problems in the course of their formation and financial decentralization, and searching for ways to solve them. The definition of the notion “wealthy territorial community” is clarified, the main instrument for the formation of such communities – financial decentralization – is defined. The state of the regulatory framework for reforming local self-government in Ukraine is studied, the trends in the formation of united territorial communities for the period 2015–2018 is analyzed, the regions in which the decentralization is carried out most actively are identified. The behavior of the share of the communities’ own income in the local budget for the entire period of decentralization is analyzed, and it is found that the budget revenues of the united territorial communities increased at a higher rate than that of other local budgets; it is determined that the largest share in the structure of communities own income is presented by the personal income tax. A significant increase in the volume of state budget support for local self-governments to develop communities and build their infrastructure is revealed. The main problems that occur during the financial decentralization and formation of wealthy communities in Ukraine are identified, recommendations to solve these problems are elaborated. It is determined that further prospects for the reform are related to the implementation of the plan of measures for the second phase of the decentralization, approved by the Cabinet of Ministers of Ukraine in January 2019.

Keywords

• financial decentralization
• local self-government
• wealthy territorial community
• revenues of local budgets
• decentralization reform