Local budgets in Ukraine are facing a serious structural problem: the share of own tax revenues in their income is steadily declining. If in 2019 local taxes and fees accounted for almost 27% of the total fund, today this figure has dropped to 22–23%. The situation with the land tax is particularly dramatic — over five years, it has lost about 10 percentage points.
This was stated by Yelena Shulyak, head of the Verkhovna Rada Committee on State Power Organization, Local Self-Government, Regional Development, and Urban Planning, in a comment to RBC-Ukraine.
Why are community revenues shrinking?
According to Shulyak, today local taxes make up only a quarter of the own revenues of community budgets. In this structure, the single tax dominates — accounting for more than 50%. Land fees, previously an important source, are gradually losing ground.
The expert emphasizes that the financial stability of communities is a matter of national security under wartime conditions. It is local authorities that take on critical functions: accepting displaced persons, repairing infrastructure, and providing basic services. The stronger their own revenue foundation, the less they depend on state transfers and the more realistic their long-term planning becomes.
Technical gaps and hidden potential
In Shulyak's opinion, the decline in the share of local taxes is linked not only to objective losses due to hostilities but also to systemic accounting problems. Some land, real estate, and taxpayers simply fall out of the registers — and thus out of the budgets. "What is not in the register is mostly not in the budget either," she noted.
However, there is also a positive signal: revenues from the property tax demonstrate the most dynamic growth among local taxes. This indicates hidden potential — in particular, the possibility of returning objects that are currently unaccounted for into the tax base.
"The decline in the share of local taxes in community revenues is a combination of objective consequences of the war and incomplete accounting data, not a sign of the exhaustion of the revenue source itself," Shulyak concluded.
The need for changes and coordination
Earlier, the Verkhovna Rada announced the need to allocate 40 billion hryvnias from the state budget for resilience plans and preparing communities for winter. Shulyak emphasized that the effective use of these funds requires not only financing but also proper coordination of actions at the local level, as well as legislative changes aimed at restoring accounting systems and expanding the tax base.
