Parliamentary support of the new system of inter-budgetary relations is a step towards real financial independence of local self-government

According to the deputy Minister of regional developmet, construction, and housing and communal services, Vyacheslav Negoda, today territorial communities and local self-government bodies of all levels have recieved a clear signal of willingness of central authority to grant financial independence to local budgets.

He reminded, that on December 25, 2014, Verkhovna Rada adopted in the first reading the draft Law of Ukraine “On Introduction of Amendments into Budget Code of Ukraine” (concerning inter-budgetary relations reform). 

“Support of this draft law is an incentive for local self-government, for communities, longing for development, to join efforts in solving of common problems. This draft law should improve budgetary legal relations and substantially increase financial independence and capacity of local budgets”, Vyacheslav Negoda said.

Particuarly, the draft law provides for extension of income base of local budgets and stimulation of communities for unification through a mechanism of transition of budgets of unified communities to direct inter-budgetary relations with the state budget, delegation of responsibilities, equal to those of cities of oblast’ significance, to such communities.

According to Vyacheslav Negoda, income of local budgets will be increased through transfer of revenues from payments for provision of administrative services from local budget, increase of environmental tax rate assessment from 35 to 80 %, assigning of income tax of physical persons to local budgets: 60 % will remain in cities of oblast’ significance and raions, 15 % – in oblast’ budgets, 40 % – in the budget of the city of Kiev. Beside that 10 % of private enterprises’ income tax are going to “land” in oblast’ budgets.

Finally, starting with 2015, it is intended to introduce a tax on retail of excisable products, ranging between 2% and 5 % of sold products’ price, as well as expand property taxation basis. “It is important, that decision on introduction of these two taxes, including their sizes, is placed within the competency of local councils” Vyacheslav Negoda explained.

Local self-government bodies will also get more opportunities for involvement of Ukrainian and foreign investments in development of their respective territories.

According to preliminary calculations, in 2015 the increase of local budget resource should exceed 30 billion UAH in total.

According to Vyacheslav Negoda, there is a series of comments on the draft law from associations of local self-government bodies. Particularly, the comments concern debt reliefs for local budgets according to mid-term indicators, more strict liability of disbursing services for timely service, and other issues, which can be taken into consideration while the draft law is prepared for the second reading.

“In general, after adoption of this draft law, local self-government bodies will get considerable financial competencies, and they must be ready to implement these competencies effectively. It should also be understood that, greater opportunities mean greater responsibilities, first and foremost, before the community”, Vyacheslav Negoda noted.

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