The Prospects for Reforming the State Fiscal Policy

Abstract

Currently, developing the tax system and improving financial relations between the state and taxpayers are rather important aspects of reforming the economic situation in Ukraine and in other countries. The study is aimed at analyzing the history and current state of the tax system in the country, which allows us to identify existing deficiencies in the Ukrainian tax system, to compare it with tax systems of other countries, to study and evaluate the tax experience of developed countries in the context of its implementation into Ukrainian economic reality. This also allowed the author’s team to draw their own conclusions and to develop alternative approaches to reforming the taxation system in Ukraine and in some other countries. The main scientific and practical results of this study are that the following has been investigated, substantiated and proposed for implementation: firstly, the use of preventive taxation aimed at avoiding tax evasion and providing effective protection of the fiscal interests of the state; secondly, the reform of the corporate income tax (corporate tax) by transition from the proportional rate to the regressive one; thirdly, abandonment of the proportional rate and use of the less harsh (weighed, slow) progressive rate of the personal income tax; fourth, shifting the priority in tax control from planned continuous tax audits to tax investigations and introducing indirect methods for determining tax liabilities into tax administration practice. The authors claim that the implementation of the proposed reforms of the tax system and tax administration practices will increase the level of tax rates reasonableness and improve conditions of voluntary fulfillment of tax obligations by the taxpayers. This will also become an economic factor in preventing tax evasion, restore the equity in the personal income, ensure the efficiency of tax administration through indirect methods, and, in general, improve tax climate in the society. Proposals for reforming the tax system and improving the tax administration mechanism will be of great use for the scholars who do research on taxation and will be useful for the governments of the countries which are looking for ways to improve their own tax policy.