PRACTICAL ASPECTS OF FORECASTING LOCAL TAX AND DUTY REVENUES

Abstract

This article determines the nature of forecasting within the framework of the local tax and duty administration mechanism. It is demonstrated that forecasting is a fundamental element of the local tax administration mechanism. The place and role of forecasting local taxes and duties in enhancing the efficiency of local budget revenue generation are substantiated. The author has developed forecasts for local taxes and charges based on an analysis of time series, carried out in several stages using the principle of decomposition. This approach has made it possible to establish the significance of each type of local tax and charge in forming the revenue base of local budgets, and to justify their pivotal role as the main instrument for enhancing the financial autonomy of local authorities. It has been demonstrated that the forecasting results are entirely scientifically sound and, with a certain degree of probability, predict various scenarios for the development of the forecast variables, taking into account changes in the influence of various factors. The projected revenue from various types of local taxes and charges are examined in three possible scenarios for the national economy: 1) the continuation of current economic trends into the future; 2) a deterioration in the country’s economic situation caused by war, economic or socio-political factors; 3) an economic upturn resulting from the end of the war, increased business activity, improved market conditions, etc. These scenarios correspond to the optimistic, pessimistic and baseline forecasts. It has been calculated that, according to the point estimate, total local tax revenue will rise from 136.0 billion UAH in 2026 to 155.2 billion UAH in 2028. The single tax demonstrates the highest fiscal resilience, whilst land tax shows a downward trend. The implementation of this approach in practice makes it possible to identify the fiscal potential of each local tax or levy, to estimate the level of revenue in the event of changes in the economic situation caused by exogenous and/or endogenous factors, and will also facilitate the adoption of effective management decisions in the field of crisis-response tax management.