Tax Benefins as a Tool to Impement the Concept of Fairness in Taxation

• Main Authors: Bechko P. K., Barabash L. V., Lysa N. V.
• Format: Article
• Language: English
• Published: Mykolayiv National Agrarian University 2019-03-01
• Series: Modern Economics
• Subjects: tax; benefit; tax benefit; fairness; taxation principle
• Online Access: https://modecon.mnau.edu.ua/en/?smd_process_download=1&download_id=10962

Introduction. In a contemporary economic environment, the issue of improving fairness in taxation still remains unresolved in all countries. In this context, one of the aspects, that is basic and at the same time makes taxation complicated, is tax burden that influences directly the development of the economy of the state. Its fair distribution makes the basis for strengthening the fairness in taxation, which, according to the definition of A.Smith, is one of the four main principles of taxation. Purpose. Therefore, the question arises as to the detection of efficient tools that will promote the strengthening of the role of the fairness principle in the current taxation system of Ukraine. Results. Tax Code of Ukraine defines a number of fundamental principles, on which the activity of the national taxation system is based, that characterize and regulate its functioning, considering both the peculiarities of payers and the duties of controlling authorities. The principle of fairness occupies a prominent place among them, though it is identified with the functioning of tax incentives, that appeared independently from the concept “fairness”. Functioning in the current tax system in Ukraine, tax benefits perform two opposite tasks: on the one hand, they destroy formal equity, which the state strives to achieve, on the other hand, it is the tool, that helps to achieve this equity. Applying tax benefits in the case when a tax payer (legal person) is unable to pay taxes or to stimulate priority and problematic spheres and branches of a national economy is one of the prerequisites to create a fair tax system. For natural persons tax benefits are used in case of low paying capacity of certain categories. At present, in Ukraine every tax or levy has a number of benefits, even though their number reduced in 2017 compared to 2010 by 77 benefits, and the share of benefits, cost-intensive for the budget, reduced by 29.9 percentage points, it is impossible to count the efficiency of their functioning. According to the Tax Code of Ukraine, tax benefit is understood as a full and partial exemption of payers from taxes when justified as provided for by the tax legislation. Though at present in Ukraine there are no clear identification features of benefits as an economic phenomenon, they are nevertheless regarded as efficient incentive tool of the activity and behavior of payers. The negative point is the fact that neither in legal documents nor at the scientific and theoretical level there are methods of evaluation of the efficiency of the functioning of tax benefits. Therefore, only the volumes of money, that were not obtained by the budgets of different levels, and the absence or availability of the incentives to carry out the activity by the payers testify their efficiency. Conclusions. Existing situation in Ukraine in the organization and functioning of tax system, based on the principles of social justice, requires clear definition of the concept “tax benefits” as well as approval of the methodology, that defines the efficiency of their functioning. Elucidation of the outlined issues will promote the rational and substantiated use of benefits in taxation process and stimulate the reduction of inequity among taxpayers.