NISPAcee Annual Conference
V. Working Group on Public Sector Finance and Accounting
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Property taxation in Ukraine: Present situation and the prospects for improvement
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Abstract not available
Immovable property tax is levied in Ukraine in form of a land tax. The other component of the immovable property taxation – buildings and constructions, or land improvements – is not the incidence of the tax.
It is worthy to note that though tax on buildings and constructions is not implemented, such tax is foreseen in the Law On Taxation System in Ukraine. For a long time, attempts to pass and implement a legislation defining principles and requirements to immovable property tax administering have proved to be futile albeit a dozen of draft laws were developed and proposed for Ukrainian Parliament consideration.
The discussion on the expediency and necessity of introduction of the tax is still going on in Ukraine. On one hand it is believed that the fact that the tax is not levied in the country explains deficiency of sufficient funds of local budgets what makes them very much dependant on transfers from the state budget and, consequently, it means dependency of local governments on the Central government. On the other hand, the implementation of the tax failed because of absence of an efficient system of immovable property assessment. Absence of registries of immovable property objects and their owners is yet another impediment for the tax introduction.
This situation has been lasting for more than 10 years, and even if the immovable property tax in form of tax on buildings and constructions is introduced, it seems it will be defective from the very beginning due to its structural imperfections. For instance, the intention to impose the tax on prosperous section of population will lead to concentration of the tax revenues in budgets of well-to-do localities, while underdeveloped territories will suffer from lack of financial resources further on.
That is why the goal of the paper is two-fold. The first objective is to provide an analysis of the land tax currently levied in Ukraine according to the format and complying with the requirements of the Research Protocol of Property Taxation in CEE and CIS Countries, including overview of government structure and intergovernmental relations, share of the land tax in the general revenue structure, overview of the administrative procedures of the tax. The second objective of the paper is to analyze drawbacks of current legislation, which regulates land tax levying and to present possible ways to reform the existing system of land taxation to make the tax a stable revenue source evenly distributed among the whole territory of the country.