An assessment of the trends and role of local taxes and charges in the structure of tax revenue for local budgets

Abstract

The article analyzes the structure, dynamics, and fiscal role of tax revenues in the formation of local budget revenues in Ukraine during the period from 2015 to 2025. Calculations indicate that tax revenues constitute the primary source of financial resources for territorial communities and the main driver of the financial potential for territorial development. An analysis of tax revenue trends reveals growth in absolute terms. Based on a developed power-law economic-mathematical model, the impact of tax revenues on the aggregate revenues of territorial communities is substantiated. The calculations indicate that a 1% increase in tax revenues leads to a 0.5% rise in the revenue of Ukraine's local budgets. Trends in the collection of key local taxes and fees specifically the single tax, the land fee, and the tax on real estate other than land were analyzed. Controversial and problematic aspects of single tax administration were identified, particularly the practice of allocating revenue based on the place of registration of individual entrepreneurs rather than the location of their business operations, which results in revenue losses for the respective local budgets. The study substantiates the role of this tax in stimulating territorial development by fostering specific types of activities within the scope of local self-government authorities' powers and by taking into account the fiscal potential of specific local taxes and fees. It is established that fluctuations in the absolute figures of single tax revenues to local budgets are primarily driven by the need to adapt tax legislation to wartime conditions. An analysis of the revenue trends for land payments and real estate tax from 2015 to 2025 was conducted, leading to the conclusion that the minimal revenue levels are attributable to hostilities and result from extensive mine contamination (or occupation) of territories, as well as the loss of property and land by citizens and businesses. It is substantiated that the further strengthening of the financial base of local self-government bodies will be facilitated by the comprehensive development of property taxes and the improvement of local fee administration, which aligns with Ukraine’s European integration aspirations.