Inequality in the Distribution of Income as at Threat to the Sustainable Development of United Territorial Communities in Ukraine

Abstract

Current decentralization and reform of the administrative and territorial structure of Ukraine, the issue of overcoming inequalities and disparities of territorial development in Ukraine by building an effective system of financial management for united territorial communities (UTCs) as basis for territories’ and country&s;s sustainable development becomes especially relevant. In the analysis, general scientific methods (analysis and synthesis, induction and deduction) and special methods of phenomena and processes analysis (abstraction, econometric and econometric-mathematical modeling) have been used. The study analyzes the effectiveness of intergovernmental fiscal relations system and income distribution within the united territorial communities in the context of inequalities and imbalances as a threat to the territories’ and country&s;s sustainable development. It has been proved that the current system of fiscal equalization of receipts and expenditure has some disadvantages related to basic and reverse subsidies. It has been proposed to determine the maximum allowable limits of reverse subsidy in relation to income growth rates per one UTC&s;s resident applying the logistical curve. Marginal value of the subsidy has been identified. 124 Current system of united territorial communities’ expenditures, which includes financing of education, culture, health care, social protection, housing and communal services, and infrastructure development has been analyzed in the study. It has been shown that in the current legal framework regarding united territorial communities, there are no effective guarantees of optimal, balanced budget allocation between UTCs settlements—members. To overcome current disparities in expenditure distribution of a UTC budget, it has been proposed to use economic and mathematical model based on the first-order differential equation, which allows to consider both the dynamics of UTC per capita income and changes in its population.