Problematic Aspects and Improvement of Property Taxation in Ukraine

Abstract

The aim of the article is to study the problematic aspects of property tax administration and identify approaches to its improvement. It is found that property tax revenues in Ukraine are at a low level relative to GDP, their share in GDP does not exceed 1%, while the level of this ratio in the EU Member States is on average 2.2%. During the period under analysis, there is a tendency to a slow reduction in the share in GDP of both local taxes and fees, as well as property tax, which makes local budgets dependent on transfers from the State budget and the shares of national taxes and fees assigned to them. There is a steady tendency to reduce the share of property tax in the tax revenues of local budgets of Ukraine in recent years, which is associated with the full-scale war in Ukraine and the tax benefits for the payment of property taxes adopted by the Verkhovna Rada of Ukraine. It is determined that the largest share in the structure of property taxes falls on land payments, while the share of transport tax is very low due to the limited list of objects that are liable to taxation. The main problems of property tax regulation in Ukraine have been allocated as follows: insufficient level of effectiveness in the administration of real estate tax, imperfect process of determining the property tax base, unreasoned establishment of property tax benefits, centralized administration of property taxes. Different approaches to tax administration and foreign experience on this issue are analyzed. The expediency of transferring the powers to administer property taxes to local self-government bodies in order to strengthen the financial capacity of communities and reduce public expenditures is substantiated. It is defined that local self-government bodies represent the most interested subject in the formation of a self-sufficient system of local finances, and tax service bodies have insufficient resources and have low motivation to administer property taxes. The problems for local authorities in case of obtaining powers to administer property tax are outlined. A new model of property tax administration has been proposed, in which local self-government bodies exercise the entire set of powers to administer property taxes. Directions for improving the property tax administration system in Ukraine are also proposed.

Keywords

• property tax
• real estate tax
• land tax
• transport tax
• administration of property taxes