Baltic Journal of Economic Studies (Mar 2020)
ECONOMIC PRINCIPLES OF TAXATION: PROBLEMS OF DEFINITION AND EMBODIMENT IN THE TAX LEGISLATION OF UKRAINE AND THE EUROPEAN STATES
Abstract
Today, almost every state feels the impact of the financial crisis and is looking for ways to overcome it. It is obvious that the development of economic relations of any state is influenced by taxation, and through taxes, the state has an impact on the property of individuals and legal entities. At the same time, establishing the optimum level of taxation for both taxpayers and the state is an important factor for economic uplift, ensuring the balance of public and private interests in tax and legal regulation, under which there is a proper financial support for the performance of the tasks and functions by the public authorities with reasonable and justified interference of the state in the right of private ownership of persons by means of the taxes. The construction of the tax system, the amount of taxes and their rates should not depend solely on the funds necessary for the state. This process is also influenced by other factors that find their objectification in the relevant principles, because taxation should be reasonable. The purpose of the article is to characterize certain economic principles, which should be the basis of taxation and which should be defined in tax legislation. This will be performed with the dogmatic method, the methods of analysis and synthesis, the systemic method and the case study method. The basis for building the tax system, determining the amount of taxes, the size of their rates, is in the economic factors, which should be taken into account to ensure the effectiveness of taxation and tax regulation as a whole. They have their reflection in the relevant principles as the initial provisions of taxation, acting as fundamental in regulating tax relations. The range of economic principles, which taxation is based on, and the content of which is currently debated in scientific circles, is as follows: proportionality (taxability), cost-effectiveness of taxation, fiscal sufficiency, economic basis of tax, economic justification for tax. They do not exist in isolation from each other, but constitute a clear system, in which their logical connection and influences are traced. Results. Proportionality as a principle of taxation is determined by analyzing the payer's financial position, the actual ability to pay taxes, and the economic benefit he/she receives in the course of paying taxes and fees (the economic result of the payer). The principle of cost-effectiveness of taxation means that the establishment of taxes and fees should be such that the amount of revenues from their payment to the budget exceeds public expenditure and leads to effective taxation (the economic result of the state). The principle of tax sufficiency provides a reasonable restriction on those public needs that need to be met through taxpaying, since these needs cannot be absolute. The principle of the economic basis of the tax indicates source for its payment, which is formed by the corresponding taxation of transactions or other taxable objects. The principle of economic justification for the tax determines the set of relevant factors that allow to approach the characteristics of taxation in different ways, taking into account certain economic indicators, by ensuring that the balance of private and public interests in tax and legal regulation is achieved. In fact, it combines an assessment of compliance with the principles of proportionality (taxability), costeffectiveness of taxation, tax sufficiency, and the economic basis of tax. The results obtained are original, they will allow to improve the normative provisions before consolidating the principles of taxation in tax legislation.
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