EXPERIENCE OF FORMING BUDGET EQUALIZATION SYSTEMS IN THE COUNTRIES OF THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT
Topicality. Reforming of the state regional policy and increasing of the socio-economic level of development of administrative-territorial units require comprehensive research and study of the experience of foreign countries regarding the methods of forming budget resources and finding an effective model of budget equalization, which is especially relevant in the context of the decentralization reform.
Aim and tasks. To carry out the analysis of budget equalization systems in the countries of the Organization for economic cooperation and development, and to substantiate the possibility of using foreign experience of budget equalization in Ukraine.
Research results. In foreign practice, several basic models of budget equalization are distinguished: horizontal and vertical equalization of income or expenses. A representative taxation system with a standard set of taxes is used to assess the possibility of revenue collection. The expenses equalization model compared to the income equalization model provides an answer to the question of whether the community has become capable, or how close it has come to it. A necessary condition for the application of this model is the availability of expenses standards for the provision of public services. The "gap-filling" fiscal equalization model combines expenditure and income equalization into a single transfer designed to fill the gap between financial needs and income. In practice, there are very few countries that use only one of the budget equalization models. Basically, there is a combination of different models and methods of horizontal and vertical equalization of income and expenses. The basis of the construction of budget equalization systems are the coefficients and formulas used to determine the size of equalization transfers. Systems that include elements of income equalization usually rely on a standard set of taxes and standard tax rates. At the same time, one of the solutions is to use a small set of taxes. Expenses equalization systems are more complex because cost estimation often involves a large number of factors. In some countries, regression-based standardized costing approaches have been used. Budget equalization systems are not static entities, the norm of the need for their periodic analysis and evaluation is often included in the legislation underlying them. Such an analysis can lead to reforms of budget equalization systems. Several key factors motivating the reform of equalization systems were identified: growing or high levels of inequality in the fiscal capabilities of communities, regional incomes or the provision of public services; insufficient fiscal autonomy; unstable and non-transparent budget alignment; inadequate incentives and lack of political neutrality in the budget equalization system. Reform of budget equalization systems in OECD countries is carried out in the following directions: transition to systems based on rules; increasing the fiscal autonomy of communities; simplification of alignment formulas; simplification of the representative tax system; periodic review of alignment formulas.
Conclusion. In practice, there are very few countries that use only one of the budget equalization models. Basically, there is a combination of different models and methods of horizontal and vertical equalization of income and expenses. The basis of the construction of budget equalization systems are the coefficients and formulas used to determine the size of equalization transfers. The income equalization system relies on a standard set of taxes and standard tax rates. Cost equalization systems are more complex because cost estimation often involves a large number of factors. Budget equalization systems are not static entities, the norm of the need for their periodic analysis and evaluation is often included in the legislation underlying them.
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