How to improve the mechanism for the inclusion of excise tax on fuel to local budgets and to increase the interest of local self-government bodies in its surplus? The joint answer-proposal to this question was prepared by the local self-government associations and international technical assistance projects and programmes within the framework of the Donor Board under the Ministry of Regional Development, Construction, Housing and Communal Services of Ukraine, as reported by MinRegion.

We are talking about the need to introduce changes to the budget, tax and other legislation that affect the formation of indicators of the draft State Budget for 2019.

Experts from the working group of the Donor Board propose to restore the previous mechanism: the taxation base is the retail sale of fuel through petrol stations, which will be included to the local self-government budgets by 100% (tax rate – 5% of the total volume). In addition, such a tax is proposed to be fixed for the revenues of local self-government budgets. The proposal applies to those who have direct interbudgetary relations with the state budget – budgets of cities of oblast significance, AHs and oblast budgets (in terms of revenues to be collected on the territory of non-amalgamated hromadas).

The excise tax on retail sale of fuel is proposed to be enrolled to a special fund of local budgets. The purpose is to focus on the financial support of works related to repair and maintenance of roads.

The excise tax on imported and produced fuel, which is a source of revenues of the State Road Fund, is proposed to be enrolled to the state budget from 2019 in the amount of 100% (instead of 75%, as stipulated by the current legislation from 2019 and 100% from 2020).

Pursuant to the Ministry, proposals have been prepared by 3 areas:

• to the draft State Budget for 2019
• changes to the budget and tax legislation that affect the formation of indicators of the draft State Budget for 2019
• changes to the budget, tax and other legislation aimed at supporting local self-government development and increasing their capability to effectively manage budget resources, while not affecting the formation of indicators of the State Budget for 2019

To be continued…