Revenues of the general fund of local budgets

During January-June 2019, revenues to the general fund of local budgets of Ukraine (excluding interbudgetary transfers) amounted to UAH 128.9 billion, which is 49.8% of the approved annual plan, taking the changes into account.

Compared to the same period in 2018, revenue growth is UAH 21.1 billion or +19.5%.

It should be noted that the growth rates of revenues in the reporting period of the current year decreased compared to the previous year – as a result of the first half of 2018, the revenue growth rate was 23.3%, compared to 2017.

During the first half of the year, the Kyiv city budget (general fund without transfers) received UAH 21.4 billion, which is 16.6% of the total sum of revenues to all local budgets of Ukraine. For comparison, Kyiv city revenues are almost equal to the volume of consolidated revenues of rayons’ budgets (UAH 21.7 billion).

Local budget revenues account for the largest share of the personal income tax – UAH 77.2 billion, or 59.9% of total revenues of the general fund of local budgets. Compared to the first half of 2018, tax revenues increased by UAH 13.9 billion or 21.9%.

The next major source of local budget revenues is land payment, which belongs to the property tax and is a component of local taxes. In the structure of revenues of the general fund of local budgets, land payments make up 12.1% (Chart 1). In the reporting period, local budgets received land payments of UAH 15.6 billion, which is 23.4% (or UAH 3.0 billion) more than the revenues received for the same period in 2018. Among other factors, revenue increase from land payments was influenced by the abolition of preferential taxation of land granted for railways since the beginning of 2019 (according to the estimates, in 2019 PJSC “Ukrzaliznytsia” should pay to the local budgets UAH 4.2 billion of land payment, compared to UAH 1.2 billion paid during 2018).

Chart 1

A significant part of the structure of local budget revenues belongs to single tax. It amounted to UAH 16.2 billion, which is 22.8% (or UAH 3 billion) higher than last year's revenues and constitutes 12.6% of the total revenues of the general fund of local budgets. Individual entrepreneurs transferred to the local budgets UAH 12 billion of single tax (or 74.2% of its total amount).

During the 1st half of the year local budgets received UAH 6.4 billion of excise tax.

Trends and socio-economic situation lead to the conclusion that according to the results of 2019, the amount of revenues to the general fund of local budgets will make up UAH 277-280 billion.

Revenues of the general fund of budgets of amalgamated hromadas

In 2019, 806 amalgamated hromadas have direct interbudgetary relations with the state budget (including 24 cities of oblast significance to which an accession took place). In the first half of 2019, the revenues of the general fund of AHs (excluding transfers from the state budget) amounted to UAH 17.6 billion, which makes up 13.7% of the total volume of revenues of all local budgets of Ukraine (Chart 2).

Chart 2

Out of 665 AHs that had direct interbudgetary relations in 2018 (regarding which there is a correct comparative basis), revenues in the first half of the current year amounted to UAH 10.7 billion, which is 18.7% more than last year.

In the general structure of the general fund revenues of 665 AHs, the share of the personal income tax is 57.5%, its revenues amounted to UAH 6.2 billion. In addition, there were inflows of land payments – UAH 2 billion, single tax – UAH 1.5 billion, real estate tax other than land – UAH 205.7 million.

The detailed dynamics and structure of 665 AHs’ revenues generated in 2015-2017 can be found in Table 1.  

Table 1

It should be noted that the total population number registered in amalgamated hromadas is 8315.3 thousand people. Of 141 AHs that held their first elections in 2018 (with account of accession), the total number of registered residents amounts to 2694.6 thousand, of which 1793.1 thousand (66.5%) reside in 24 cities of oblast significance accessed by territorial hromadas.

 

Local budget expenditures

(cumulatively on general and special funds, including interbudgetary transfers)

The total expenditures of local budgets in January-June 2019 amounted to UAH 261.5 billion, which is UAH 10.1 billion less than the expenditures made in the same period of 2018. Of this amount, general fund expenditures amounted to UAH 225.8 billion this year, which is UAH 13.9 billion less than last year. 

Chart 3

Expenditures on salaries (36%), social security expenditures (20%), and other current expenditures (18.5%) are predominant in the structure of local budget expenditures.

From the general fund of budgets of AHs with almost 20% of registered Ukraine’s population, expenditures amounting to UAH 28.6 billion were financed (which is 11% of the total expenditures of all local budgets of Ukraine).

 

Interbudgetary transfers

During January-June 2019, local budgets received state budget transfers totaling UAH 136.1 billion, in particular:

• base subsidy – UAH 5.2 billion;
• healthcare subvention – UAH 27.7 billion;
• educational subvention – UAH 42.1 billion;
• subventions for social protection of the population – UAH 48.7 billion;
• subvention for the formation of AH infrastructure – UAH 0.7 billion;
• subvebntion for the implementation of socio-economic development measures of certain territories – UAH 2.0 billion;
• subsidy for road maintenance – UAH 6.6 billion.

Local budgets transferred UAH 3.4 billion of the reverse subsidy to the state budget.

This publication was prepared with the assistance of the European Union and its member states Denmark, Estonia, Germany, Poland and Sweden. The contents of this publication are the sole responsibility of its authors and cannot in any way be taken to reflect the views of the U-LEAD with Europe Programme, the Swedish-Ukrainian project “Support to Decentralisation in Ukraine”, the European Union and its member states Denmark, Estonia, Germany, Poland and Sweden.

These materials were prepared on the basis of the data provided by the Ministry of Finance of Ukraine, State Treasury Service of Ukraine by the experts of the U-LEAD with Europe Programme and SKL International project:

• Viktor Ventsel, U-LEAD with Europe Programme expert
• Yulia Siberyanska, U-LEAD with Europe Programme adviser
• Igor Gerasymchuk, SKL International project expert

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