Communities may gain more tools to influence the administration of local taxes. This issue was raised during a meeting of the working group of the Verkhovna Rada of Ukraine, which focused on improving the efficiency of tax collection.

The focus is on property tax and strengthening the role of local governments in the process of its administration.

The All-Ukrainian Association of Amalgamated Territorial Communities presented its position during the discussion. On behalf of the Association, the meeting was attended by the Chairman of the Association, Oleksandr Korinnyi, Mayor of Novoukrainka; the Deputy Executive Director of the Association, Tetiana Arseniuk, Coordinator of the ‘Local Budgets and Finance’ platform; and Vasyl Koval, Chairman of the platform. During the meeting, experts Yanina Kaziuk and Ihor Herasymchuk also presented their findings.

The Association put forward proposals that would give communities not just more powers, but real tools for working with taxes. These include, in particular:

• the voluntary transfer of some local tax administration functions to communities
• access to tax and registration information
• the development of digital services for tax payments (via ‘Diya’ and banking apps)
• the right of communities to go to court to recover tax arrears
• the creation of mechanisms to maintain real estate registers and land inventories
• safeguards to prevent tax evasion during the transfer of property

Local taxes form the basis of the financial capacity of communities. These taxes ensure the maintenance of infrastructure, the provision of basic services, and the ability to plan for development.

However, communities today often have limited influence over the completeness and timeliness of revenue collection. The result is losses for local budgets and fewer opportunities for development.

Particular emphasis is placed on the approach to expanding powers. This does not mean a mandatory transfer of functions, but rather an opportunity for those communities that have the resources to do so.

This approach is consistent with the logic of Draft Law No. 14412 on the delineation of powers between levels of public governance, which introduces the concept of optional powers.

The participants in the discussion also highlighted the problem of tax arrears.

Nowadays, local governments are in fact losing revenue, but do not always have effective mechanisms for a prompt response. It is therefore proposed to grant communities the right to take legal action independently to recover debts.

The issue of local tax administration remains one of the key ones in strengthening the financial autonomy of communities.