Prykarpattya communities earned 26% more in seven months compared to last year

During a war, proceeds from taxes to the local budgets play the key role in ensuring effective operation of local self-government bodies.

Oksana Shvets, Municipal Finance and Management Advisor at the U-LEAD regional office in Ivano-Frankivsk Oblast, performed an analysis of proceeds to the local budgets of Prykarpattya amalgamated territorial communities (hromadas) in 7 months of this year.

“During seven months of 2022, the budgets of hromadas formed from tax proceeds, which account for 98% of budget revenues, non-tax proceeds and revenues from capital transactions. Personal income tax (PIT) remained the key budget-building source. Its share in the structure of budget revenues increased by 5% compared to the same period last year to 67%,” says Oksana Shvets.

Following a decline in the first months of the war, a stabilization of the situation is being observed. There have been positive changes in the dynamics of the proceeds, and as of August 1, 2022, own revenues in the communities increased by 26.2% compared to the same period last year.

“We have an opportunity to witness how the dominating role of the PIT in the revenues structure impacts the general dynamics of own revenues. In 7 months of 2022, the hromadas of the oblast received UAH 866.4 million more in personal income tax payments than in the corresponding period last year. The monthly growth rates were higher than the national indicators. In July, the budgets of Ivano-Frankivsk communities received close to 60% more PIT payments than in July last year, while the average indicator for Ukraine is only half of that,” says the expert.

Significant monthly growth of PIT proceeds compared to corresponding months of last year became possible thanks to additional volumes of PIT payments to the local budgets by the military.

“In previous years, the military units located in the territories of a number of communities were the source of such payments. However, the PIT payments of the military were not high: as of August 1, 2021, the total PIT paid to the budgets amounted to UAH 125 million. With the start of the full-scale war, the influence of PIT paid by the military on improving the financial capability of communities has significantly increased. Starting from March 2022, the growth rates of proceeds from the PIT paid by the military increased and by the beginning of August 2022, the personal income tax paid by the military to the budgets of 33 amalgamated territorial communities amounted to UAH 714 million, accounting for more than 20% of the total PIT paid,” comments Oksana Shvets.

The expert emphasized that cooperation and coordination of actions between the local self-government bodies and the State Tax Service is extremely important during the war, as it ensures stable proceeds to the budgets.

The U-LEAD with Europe is a local empowerment, accountability and development programme in Ukraine. The programme is funded by the EU and its member countries Germany, Poland, Sweden, Denmark, Estonia and Slovenia and aims to support Ukraine on its path to improve local self-government development in Ukraine. U-LEAD contributes to the establishment of multilevel governance which is transparent, accountable and responsive to the needs of the population, and to strengthening hromadas’ capability.

Source: galka.if.ua