Mechanism of formation of financial resources of local authorities in terms of society democratization

Abstract

Introduction. The peculiarities of the domestic system of formation of local budgets resources and characteristics of local government reformation in Ukraine in the context of decentralization of power are considered in the article. The basic contradictions in the order of formation of revenues of local budgets for financing the implementation of the functional powers of the State and powers of local authorities are revealed. The directions of further changes in the system of formation of revenues of local budgets, allocation of state revenues according to the budgets of different levels and the tax system aimed at increasing the level of decentralization of budgetary resources are offered.

Purpose. The aim of the article is justify the necessity to ensure financial sustainability of local authorities, to identify the main tendencies in formation and use of financial resources of the budget, to evaluate a financial stability of local budgets.

Method (methodology). The following research methods have been used in this paper: bibliographic method, method of historical and logical analysis of professional and informative sources, method of analysis and synthesis, systematic method of scientific cognition.

Results. The study of problems of effective functioning of local budgets allows to make a conclusion about the importance of implementation of measures which can provide the  improvement of the conditions of local budget formation. Nowadays and in future there is a need for a clear distribution of powers between the central authorities and bodies of territorial and local self-government, which implies the transition to the decentralization of the public finance sector. The necessity for further improvement of the mechanism of inter-regional fiscal equalization remains unchangeable. We should mention that the method of regulation of local budgets with the withdrawal of budgetary surpluses to the budget of the highest level does not only negatively impact on the revenue base of local budgets, but also deprives local authorities of incentives to increase their incomes. Thus, the solution of these and other problems concerning the formation and the use of local budgets are largely allocated to the expansion of economic independence of the regions of the country.