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Also, market concentration can be limited with institutional program, which should contain such constraints as:
• only individuals holding Ukrainian citizenship should own land after land market formation;
• land owned but not cultivated should be a subject to fines and possible loss of the right of use after two years of non-cultivation;
• new landowners should be given two options to organize production: they could farm individually or they could set up associations by pooling together the newly distributed land;
• land should be free of land taxes for few years of market adaptation;
• soil degradation prevention and amelioration should be financed and coordinated largely by the government [9].
In general, strategic role of land market in Ukraine stipulates active governmental participation in land ownership and land use regulation. For example, government should establish special fiscal regimes for agricultural land sales on derivative market and prohibit conversion of agricultural land to urban land, while stimulating exhausted land purchasing. Government should provide sound land cadastre management and monitoring of such indices as: land exhaustion, soil depletion, land development and land reclamation. Also, information system development for registration, arbitrage, controlling of land sale and lend lease [10] and avoiding of market shocks, overestimation of assets, fictitious capital expansion, derivative "overheating" of land market should help to stabilize land market.
JEL classification G38
Conclusion. Land market formation in Ukraine strongly influenced by different contradictions such as: liberalization of land market while unprofitable agricultural production, active use of derivative instruments under global financial crisis, total large-scale transformation of agricultural land into urban or suburban land etc.
Private land ownership abridgement, responsibility for improper land use and land conversion, restriction of TNC participation in land concentration is a subject for further researches.
1. Kozhushko L. F., Velesik T. A. Land Improvement and Land Market Formation / Kozhushko L. F., Velesik T. A.// Rural Development, 2009. -p. 234-239. 2. Fedorov M. Specialties of agricultural land market formation in Ukraine / Fedorov M.// Economics of AIC, №5, 2007. - p. 73-74. 3. We-gren S.K. Land Reform and the Land Market in Russia: Operation, Constraints and Prospects / Wegren S.K.// Europe-Asia Studies, No. 6, 1997. -Vol. 49. - p. 959-987. 4. Murray W.G. Land Market Regulations / Murray W.G. // Journal of Farm Economics, 1943. - Vol. 25. - p. 203-218. 5. Castle E.N. The Market Mechanism, Externalities, and Land Economics / Castle E.N. // Journal of Farm Economics, No. 3, 1965. - Vol. 47. - p. 542-556. 6. Higgins J. Price Determination and Price Control in the Agricultural Land Market / Higgins J.// Irish Journal of Agricultural Economics and Rural Sociology, No. 2, 1979. - Vol. 7. - pp. 127-148. 7. Aligica P.D., Dabu A. Land Reform and Agricultural Reform Policies in Romania's Transition to the Market Economy: Overview and Assessment / Aligica P.D., Dabu A.// Eastern European Economics, No. 5, 2003. - Vol. 41. - p. 49-69. 8. Innes R. Stop and Go Agricultural Policies with a Land Market / Innes R.// American Journal of Agricultural Economics, No. 1, 2003. - Vol. 85. - p. 198-215. 9. Medici G. Some Considerations on the Land Market in Europe / Medici G. // The Journal of Land & Public Utility Economics, No. 2, 1946. - Vol. 22. -p. 171-173. 10. Maier F. Prevailing Land Market Forces / Maier F.// Journal of Farm Economics, No. 5, 1957. - Vol. 39. - p. 1510-1513.
Надійшла до редколегії 05.05.12
T. Zatonatska, PhD, Associate Professor, A. Stavytskyy, PhD, Associate Professor, Taras Shevchenko National University of Kyiv
THE DEVELOPMENT OF FORECASTING METHODS FOR INCOME TAX OF UKRAINE
IN THE MEDIUM TERM
Досліджено підходи до розробки методик прогнозування податку на прибуток підприємств при формуванні Державного бюджету України. На основі зарубіжного досвіду та вітчизняного законодавства запропоновано методику розрахунку прогнозу зборів розглянутого податку у середньостроковій перспективі. Запропоновано сценарні підходи для розрахунку прогнозних значень в залежності від впливу зовнішніх та внутрішніх факторів на 2013-2014 роки.
Ключові слова: податок на прибуток підприємств, сценарний прогноз, бюджет.
Исследованы подходы к разработке методик прогнозирования налога на прибыль предприятий при формировании Государственного бюджета Украины. На основе зарубежного опыта и отечественного законодательства предложена методика расчета прогноза сборов рассматриваемого налога в среднесрочной перспективе. Предложены сценарные подходы для расчета прогнозных значений в зависимости от влияния внешних и внутренних факторов на 2013-2014 годы.
Ключевые слова: налог на прибыль предприятий, сценарный прогноз, бюджет.
The approaches to develop methods of forecasting the income tax were researched while forming the Government budget of Ukraine. Based on foreign experience and domestic laws the method of calculating forecast charges was considered in the medium-term. A scenario approach was proposed to calculate predictive values depending on the external and internal factors for the 2013-2014 years.
Keywords: Income tax, scenario forecast, budget.
Fiscal reform remains a key issue of public policy in Ukraine. The Economic reform programs for 2010-2014 identified the necessity for strengthening financial and fiscal discipline, introducing medium-term planning of public finance [1]. It must be noted that planning budget incomes and expenditures as well as funding budget programs is only possible with well-performing forecasts. At present it is of paramount importance to adopt the methods of forecasting in the medium term at the state level and approve them by the regulations.
The problem of medium-term forecasting revenues of budgets in different levels is becoming very actual for scientific research and for practical activities of central government. The use of medium-term budget planning affords an opportunity for participants of the budget process to agree the strategic plans according to the available budget funds
within the framework of the draft budget for the relevant year and for subsequent periods, provide a transition to the formation of long-term budget policy [9]. While implementing the medium-term budget planning and forecasting the task of high priority is to consider new approaches to the formation of budget revenues, the main budget taxes.
The development of medium-term budgeting and making forecasts for the medium-term are considered in scientific investigations of such scholars as G. Akerlof, J. Stiglitz, R. Solow, J. Tobin, T. Efimenko, I. Lunina, I. Lutyy and others.
The active implementation of medium-term forecasting and planning requires the development of new methods of forecasting, based on overseas experience, adapted to the Ukrainian context and meet the objective of the state economic policy.
© Zatonatska T., Stavytskyy A., 2012
The Ministry of Finance of Ukraine with International Bank for Reconstruction and Development provided a joint Project "Public Finance Modernization", which was approved by the Law of Ukraine "On Ratification of the Loan Agreement between Ukraine and International Bank for Reconstruction and Development" (№ 591-VI, 24.09.2008). Under this project a number of methods for forecasting indicators of budget revenues was developed. These techniques were confirmed by the order of the Minister of Finance of Ukraine (№ 1646, 24.12.2010). The methods were used to predict performance of revenues in short-term
period, but the individual components of these techniques can be considered as the basis for a medium-term forecasting methods.
The main budget taxes of the Consolidated budget of Ukraine, which form the dominant part of the tax revenue, are the value added tax (VAT), income tax, tax on personal income and excise tax. In table 1 the dynamics of the Consolidated budget of Ukraine for 2002-2010 is presented. One can see that income tax is about 12-18% of total revenues, taking the third position after VAT and personal income tax.
Table 1. Dynamics of the Consolidated Budget of Ukraine in 2002-2010, mln.UAH.
Index 2002 2003 2004 2005 2006 2007 2008 2009 2010
Tax revenues 45393 54321 63162 98065 125743 161264 227165 208073 234448
Taxes on income and income taxes, taxes on the increase in market value 20222 26759 29375 40789 48963 69189 93753 77533 91388
Corporate Income Tax 9398 13237 16162 23464 26172 34407 47857 33048 40359
Tax on personal income 10824 13521 13213 17325 22791 34782 45896 44485 51029
Taxes on property 587 600 659 833 1085 1355 1558 1538 1905
Fees for use of natural resources 2450 2780 3384 3981 4747 5948 9292 11231 12710
Domestic taxes on goods and services 18192 18561 22739 43366 61164 71914 107037 107683 115933
Value Added Tax 13471 12598 16734 33804 50397 59383 92083 84597 86316
Excise tax on domestic goods 3605 4659 6092 7347 7557 9072 10230 17934 23715
Excise tax on imported goods 493 587 613 599 1051 1496 2553 3690 4601
Taxes on international trade and external transactions 2366 3795 5067 6722 7373 10038 12303 6929 9072
Other taxes 1575 1827 1939 2374 2411 2820 3222 3159 3440
Non-tax revenues 14697 18227 24572 31778 40548 48553 60544 58436 73837
Revenues from capital operations 1101 1788 2534 2804 3218 6373 6702 3653 3143
Official transfers 292 213 418 183 154 105 135 645 180
Trust Funds 472 737 844 1354 2148 3641 3347 2160 2773
Total income (net of intergovernmental transfers) 61954 75286 91529 134183 171811 219937 297893 272967 314506
Source: Prepared according to [6]
The declaration of corporate income tax of the State Tax Service of Ukraine is the basis of the information to calculate corporate income tax according to the method approved. A forecast of economic and social development of Ukraine is the basis for the information of macroeconomic indicators. The information reported to the State Tax Service of Ukraine is used to take account of the impact on forecasted income of tax arrears, provided instalments of tax overpayments and other factors.
The analysis of the methods for forecasting revenues in the medium-term, used in the international practice, has shown that the main methods of forecasting budget-tax of the Republic of Kazakhstan and Ukraine have much in common. Let's investigate the possibility of adapting these methods to the conditions of Ukraine.
The basis of the forecasting methods of the Consolidated Budget of Ukraine in the medium-term must be the principle of affordability, which is realized by using a relatively small number of endogenous and exogenous macroeconomic indicators, most of which are public and declared in such government documents as:
• Basic directions of budgetary policy for the relevant year;
• A Resolution of the Cabinet of Ministers of Ukraine "On Approval of Forecast performance of the Consolidated budget of Ukraine for major revenue and expenditure and financing" for the relevant period;
• Consensus forecasts of the Ministry of Economic Development and Trade of Ukraine;
• Forecasts of the International Monetary Fund and World Bank.
The peculiarity of the developed methods of forecasting is application of such parameter as "effective tax rate". By
this term it is assumed the ratio of total revenues from a particular tax to the value of the real tax base.
Unlike the rates stipulated by tax legislation, effective rate reflects not the value of tax deductions for the potential base, but the amount of tax revenues on real tax base, which is less than the potential due to the exclusion of certain items from taxation. The effective tax rate may differ from the legally established tax rate because of consideration of tax benefits, the use of several (other than standard), tax rates, the availability of tax arrears, avoiding of paying, etc.
Methods of calculating corporate income tax. The first approach to the forecasting of corporate income tax is based on the projected gross domestic product by the formula:
CITt _ GDPt • SeWect where CITt - income tax in the future forecasted period; GDP, - GDP in the forecasted period; Seffecl - the average effective rate.
S _ CITt-1 . 100 effect GDPt-1
where Seffecl - the average effective rate; CITt_1 - the average amount of corporate income tax for the previous three periods, including reporting; GDPt_1 - gross domestic product in the previous period.
The second approach uses the information about the charged and the amount paid corporate income tax in terms of large taxpayers subject to monitoring State Tax Service (STS) of Ukraine, the results of annual recalculations of tax declarations.
The forecast for this option is based on estimates of expected income tax on profits from large taxpayers this year and the determined share of income taxes of large taxpayers in the total income tax for the previous three years, including reporting.
Thus one should exclude from the expected income tax such payments as: one-time payments, unsystematic, independent on industrial activity payments, including large size of annual recalculations received by temporary factors (price fluctuations, structural changes) and the amount the same percentage for acts of inspections.
The calculation of the projected amount of corporate income tax revenues as a whole is determined by the formula:
CIT
CIT — estimated V
forecast ~ p. temp
Dfact
where CITforecasl - the forecasted sum of corporate income tax; CITesiimaled - the expected tax revenue from large taxpayers in the current year; Dfact - the share of income taxes of large taxpayers in total revenue as a percentage; Vlemp - the rate of growth of gross domestic product for the
planned period.
The calculation of expected annual income taxes from large taxpayers should be predicted by the formula:
P - P
o reported onetime a q
estimated
Mfact
where Pestimated - the expected income tax revenues of the current year; Preporled - income tax revenues for the period of the current year; Poneiime - one-time tax revenues; Mfact - the number of months in the reporting period of the current year.
However, the calculated values do not include various economic and political impacts that largely determine the efficiency of enterprises, and therefore their profits. There is a need to adjust the forecasts obtained according to the world demand, cyclical economy and other factors. The main difficulty to achieve the required accuracy of medium-term budget forecasting is adequate consideration of significant variability of the Ukrainian economy and its significant impact on parameters of external factors, associated with current trends in the global economy. An important aspect is a strict adherence to the medium-term planning stages, which include budget forecasting and coordination of relevant regulations.
The analysis of progressive international experience shows that medium-term forecasting of budget revenues is conducted by several independent methods. For each of them the selected statistics with different economic nature is used. This enables to level errors and improve the quality of forecasts. In the forecast the risks of change exogenous and endogenous factors are taken into account, which let creation of scenario forecasts.
Scenario forecasts revenues of the Consolidated budget for the 2012-2014 are the main directions of economic development. Design and analysis of scenario forecasts revenues of the Consolidated budget will allow to identify trends in revenues, to outline the set of priority measures to balance the budget, determine the future tax burden, provide quality social protection, choose the effective ways of constructing budget policy, in particular to assess the availability of health care and education, determine the level of social security, to combat and prevent poverty.
Based on practical medium-term budget forecasting, which is supported by the World Bank and tested in some post-Soviet countries, it was developed and proposed a
methodological approach for predicting the main budget taxes in Ukraine.
The peculiarity of the suggested approach is that in predicting tax revenues several different methods are used, including the effective tax rate, which is the ratio of total income of a tax to the value of the tax base in the previous and current periods.
When building a forecast it should be taken into account the basic provisions contained in such documents as:
• the Program of economic reforms for 2010-2014 "Prosperous Society, Competitive Economy, Effective State";
• the Resolution of the Verkhovna Rada of Ukraine "On Main Directions of Budgetary Policy for 2012";
• the Resolution of the Cabinet of Ministers of Ukraine "On Approval Forecast Performance of the Consolidated Budget of Ukraine for Major Revenue and Expenditure and Funding for 2011-2013";
• the Resolution of the Cabinet of Ministers of Ukraine "On Approval of the Forecasts of Economic and Social Development of Ukraine for 2012 and of Macroeconomic and Social Development of Ukraine for 2013 and 2014";
• Tax Code of Ukraine.
Three possible scenarios of the Ukrainian economy were considered: pessimistic, macroeconomic (most realistic) and optimistic.
As for the pessimistic forecast revenues it can be highlighted the following factors, which can have a significant impact on the trend of reduction of budget revenues:
• the possibility of another wave of global financial crisis;
• rapid growth in energy prices and accordingly the cost of production;
• worsening of the external economic situation: regular price fall in the world commodity markets;
• increase of world prices for natural gas;
• strengthening the downward trend in the foreign exchange market and the significant issue to finance the budget deficit;
• spread of insolvency in the real economy, reduction of employment and increase the number of unemployed.
In particular, it is assumed that the reduction of the Consolidated budget revenues from corporate income tax during the forecasted period may be affected by such factors as lowering world prices for products made of metal and iron ore and increase of energy prices. Pessimistic forecast revenues of the Consolidated budget for the 20122014 period predicts that the Consolidated Budget of
Ukraine in 2013 will grow from 453.2 billion UAH to 461.5 billion UAH in 2014, i.e. an annual growth of these revenues in the period studied is estimated about 3.1%.
The macroeconomic scenario is based on the assumption that the established relationship between budgetary revenues and macroeconomic parameters generally will remain for 2012-2014, i.e., the structural changes will not happen. In this case, the calculation of the forecasts can be made on the basis of macroeconomic factor models. The estimates of macroeconomic parameters approved by the Cabinet of Ministers of Ukraine were used as exogenous variables. According to this scenario in the 2012-2014 it is estimated the economic growth in Ukraine about 4.2%. According to the macroeconomic scenario, the Consolidated Budget of Ukraine in 2013 will amount to 464,4 billion UAH, in 2014 - 483,7 billion UAH.
The optimistic forecast revenues of the Consolidated budget of Ukraine is based on the following assumptions:
• the increase of the efficiency of public investments will remain as well as their concentration to support technological innovation for the modernization of domestic production and infrastructure development;
• the share of investment expenditures of the Consolidated budget to GDP to a level not less than 5% of GDP since 2012 will gradually be increased;
• regulatory framework in investment, innovation and technology transfer will be improved;
• extensive network of technology transfer involving all its subjects will be developed;
• the processes investing businesses in the field of scientific and technological activities on the basis of public private partnership for the production of high-tech industrial products will be activated.
The optimistic scenario assumes that carrying out the sound protectionist policy will increase the share of transport and high-tech equipment in the structure of engineer-
ing. It is supposed that the diversification of external markets will be held, more products will be presented in machine building [8]. The increase revenue of the Consolidated budget for the period 2013-2014 is assumed in average of 5%. Under the optimistic scenario, revenues of consolidated budget of Ukraine in 2013 amount 473.5 billion UAH, in 2014 - 491.6 billion UAH.
Calculations of the Consolidated Budget of Ukraine according to the most probable risks of the national economy and public sector in the medium-term were the basis to form the scenario forecast revenue from the tax on profits of enterprises of Ukraine for 2013-1014 years (table 2).
Table 2. Scenario forecasts of corporative income taxes for 2013-2014 years, UAH bln
Articles revenues Pessimistic Macroeconomic Optimistic
2013 2014 2013 2014 2013 2014
TOTAL revenues (excluding transfers) 453.2 461.5 464.4 483.7 473.5 491.6
among them: tax revenues 405.4 409.7 415.2 427.9 422.7 435.0
among them: CIT 57.1 58.5 60.8 64.7 61.7 65.2
The proposed method of forecasting the medium-tax profit of Ukraine, based on the principle of availability in application, increases the transparency of the budget process, increases trust between taxpayers and government managers that control budget funds, and therefore, improves the efficiency of their use.
Thus, the article suggests the method of forecasting the revenues from corporate income tax, depending on the actions of internal and external factors, calculated forecasts of revenues for the period of 2013-2014 using three scenarios of the development of Ukrainian economy. The key feature of the proposed approach is using the effective tax rate, which is the ratio of total tax incomes to the value of the tax base in the previous periods.
1. The Prosperous Society, Competitive Economy, Effective State: The Economic Reform Program for 2010-2014: Committee on Economic Reforms under the President of Ukraine / [electronic resource] - Mode of access: http://www.president.gov.ua/docs/Programa_reform_FINAL_1 .pdf.
2. The Strategic directions of the Ministry of Finance of Ukraine for 20112013 [Electronic resource]. - Mode of access: http://www.minfin.gov.ua/ control/publish/article/main?art_id=280343&cat_id=280342. 3. Budget Code of Ukraine: Law of Ukraine № 2456-VI of 08.07.2010 [Electronic resource]. - Mode of access: http://zakon1 .rada.gov.ua/cgi-bin/laws/main.cgi?
nreg=2456-17 4. Tax Code of Ukraine [electronic resource]. - Mode of access: http://zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=2755-17.
5. Faizullaev Yo. Sh. The Mid-term fiscal planning / Yo.Sh. Faizullaev, I.A. Azizova // Development Program of the UN. [Electronic resource] -Tashkent, 2010. - 148 p. - Mode of access: www.publicfinance.uz/upload/ files/CBP_book_12shr_rasklad.pdf 6._DNNU "Academy of Financial Management" [electronic resource]. - Mode of access: http://www.ndfi.minfin.gov.ua 7. Ukraine: the prospects of development. Consensus-forecast of the Ministry of Economy of Ukraine. 2011. -Vol. 26. - P. 19 [electronic resource]. - Mode of access:
http://me.kmu.gov.ua/control/uk/publish/category/main?cat_id=73499.
8. Ministry of Finance of the Republic of Kazakhstan [electronic resource]. -Mode of access: http://www.minfin.kz/ 9._Petrenko M.B. The Essence and Features of the Application Constituent Elements of the Program Budgeting in Ukraine / M.B. Petrenko, V.M. Chubatyuk [electronic resource]. - Mode of access: http://intkonf.org/petrenko-mv-ktn-chubatyuk-vm-sutnist-ta-osoblivosti-
zastosuvannya-skladovih-elementiv-programno-tsilovogo-metodu-v-ukrayini.
Надійшла до редколегії 05.05.12
