Fiscal Policy of Economic Development: Comparative Characteristics
of Ukraine and Poland
IAROSLAV PETRUNENKO
PhD of Law Sciences, Associate Professor, Department of Economic Law and Procedure, National
University «Odesa Law Academy», UKRAINE
ORCID identifier: 0000-0002-1186-730X
RUSLAN LAVROV
Doctor of Economics, Professor, Faculty of Economics and Management
Department of Finance, Accounting and Taxation, European University, UKRAINE
ORCID identifier: 0000-0002-9655-4467
VASYL KUYBIDA
Doctor of Science in Public Administration, Professor of the Department of Regional Management, Local
Self-Government and City Management
National academy for public administration under the President of Ukraine, UKRAINE
ORCID identifier: 0000-0001-7564-4706
MAKSYM SLATVINSKYI
PhD of Economic Sciences, Professor, Department of the Finance, Accounting and Economic Security,
Pavlo Tychyna Uman State Pedagogical University, UKRAINE
ORCID identifier: 0000-0003-4096-2901
ANDRII ZELENSKYI
PhD in Economics, Associate Professor, Faculty of Economics, Department of Finance, Banking,
Insurance and Electronic Payment Systems, Podillya State Agrarian and Engineering University,
UKRAINE
ORCID identifier: 0000-0002-0725-0171
SVITLANA ONESHKO
PhD, professor, Department of Economics and Finance, Odessa National Maritime University,
UKRAINE
ORCID identifier: 0000-0003-2313-3984
DESIGN, CONSTRUCTION, MAINTENANCE
DOI: 10.37394/232022.2023.3.5
Iaroslav Petrunenko, Ruslan Lavrov,
Vasyl Kuybida, Maksym Slatvinskyi,
Andrii Zelenskyi, Svitlana Oneshko
E-ISSN: 2732-9984
46
Volume 3, 2023
Abstract: A comparative analysis of the fiscal policy of Poland and Ukraine has been conducted in the academic
paper in the context of its impact on economic development. In particular, the effectiveness of the application
of the following instruments of fiscal policy has been compared, namely: state budget deficit, state budget
expenditures and their structure, state budget revenues, their structure and tax benefits, as well as state debt
policy. The basic advantages of Poland’s fiscal policy over Ukraine’s fiscal policy have been outlined. The
attention is focused on the shortcomings of the fiscal policy of Ukraine from the point of view of its impact on
economic growth, as well as ways of optimizing fiscal instruments, taking into account the experience of Poland.
Purpose: a comparative analysis of the fiscal policy of Poland and Ukraine in order to determine the advantages
and disadvantages of its impact on economic development, as well as to outline the vectors of adaptation of the
best experience for the national economy. Design/Methodology/Approach: In order to achieve the purpose
outlined, the following methods have been used, namely: analysis and synthesis; economic and statistical
analysis and comparison; economic and mathematical; generalization. Results. It has been proved that the fiscal
policy of Poland is aimed at the development of economic infrastructure and building an economic model of
the state based on the manufacture of products with a high share of value added. It has been substantiated that
the fiscal policy of Ukraine does not have significant effects on economic development due to the use of such
instruments as public debt and capital expenditures, however, the external debt dependence of the state is quite
high. Apart from that, it has been proved that the fiscal policy of Ukraine does not increase the level of economic
complexity and development of the processing industry through the implementation of tax benefits. It has been
proposed to increase the efficiency of tax authorities in Ukraine in terms of combating the shadow economy,
boost the share of capital expenditures and raise the level of conversion of public debt into economic growth.
Keywords: Fiscal Policy, Economic Development, Economics, Financial Engineering
Received: March 23, 2022. Revised: March 15, 2023. Accepted: April 21, 2023. Published: May 31, 2023.
1. Introduction
Fiscal policy, as a policy of managing state
revenues and expenditures in the context of
influencing aggregate demand and economic
development, has always been the subject of
scientific discussions in world economic thought.
Particular attention is paid to fiscal policy under the
conditions of the economic crisis. After all, thanks
to the operative decisions of the Government in the
field of mobilization of state budget revenues and
structuring of its expenditures towards anti-crisis
purposes, it is often possible to achieve
macroeconomic stability.
At the same time, one of the areas of
research is the study of the role of fiscal policy in
the context of ensuring economic development,
analyzing the strategies for using certain fiscal
instruments. Considering the level of economic
development of Ukraine and permanent political
and economic crises, the study of the best
experience in the implementation of fiscal policy of
economic development is an extremely urgent
objective. The experience of those neighboring
countries, with which Ukraine has a common
historical past and which today are at a higher level
of development, deserves special attention.
Consequently, a comparative analysis of
the fiscal policy of Poland and Ukraine is intended
to answer the question concerning the role of fiscal
policy in economic development, the effectiveness
of its instruments and strategic orientation.
The purpose of the research is as follows:
comparative analysis of the fiscal policy of Poland
and Ukraine in order to determine the advantages
and disadvantages of its impact on economic
development, as well as to outline the vectors of
adaptation of best experience for the national
economy.
The research objectives:
1. To compare the level of economic
development of Poland and Ukraine in order to
determine the baseline conditions for the direction
of fiscal policy of these countries.
2. To investigate the impact of the state
budget deficit, its expenditures and revenues, as
well as debt policy on the GDP of Poland and
Ukraine as an indicator of their economic
development.
3. To analyze the effectiveness of
preferential taxation of enterprises in Poland and
Ukraine in terms of their compliance with the
structure of economic development and
development objectives of the state as a whole.
2. Literature Review
The investigation of the background on the
use of fiscal policy towards stimulating economic
growth has had a long-term history. However,
Keynes J.M. took a fundamental approach towards
this issue (1936), forasmuch as he substantiated the
effectiveness of the use of budget financing of
aggregate demand. The basic postulates of
Keynesian theory were successfully tested in
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practice by the US President F. Roosevelt during his
anti-crisis policy (Renshaw P., 1999). The
Keynesian theory was continued in the works of A.
Lerner, in which the theory of the so-called
“functional finances” was substantiated (Lerner A.
P., 1943; Nell E. J., Forstater M., 2005).
Later, in the scientific literature, there were
discussions about the advantages and disadvantages
of using expansive fiscal policy in order to stimulate
economic growth, combining its instruments with
monetary policy instruments, introducing
restrictive fiscal rules, etc. In addition, research on
modeling fiscal policy in the context of determining
its impact on economic growth is fairly common.
From among, it is worth noting the following
works, namely: the work of Barro R.J. (1990),
which examines the impact of public investment on
long-term economic growth; Adam C.S. and Bevan
D.L. (2005), based on the analysis of data from 45
developing countries, have proved that the budget
deficit has a negative impact on economic growth
from the long-term perspective, and the authors
have also concluded that the growth of external debt
has a negative impact on the state budget; Reinhart
C. and Rogoff K. (2010) based on an analysis of
data from 44 advanced countries have concluded
that in case public debt increases by more than 90%
of GDP, economic growth slows down; Antonio D.
(2017) has analyzed the macroeconomic effects of
fiscal policy in the context of a small open economy
on the example of Paraguay, having come to the
conclusion that capital expenditures of the state
budget have a significant effect on economic
growth in small open economies.
In addition to empirical studies of fiscal
policy, it is worth noting investigations that assess
the features of the application of theoretical
postulates of fiscal theories in practice. From
among such works, the scientific article of Stawska
J. (2017) deserves particular attention, the
conclusions from which indicate that the expansive
fiscal policy, often caused by economic
fluctuations, contributes to the deepening of the
imbalance of public finances with frequent
downturns in GDP. Restrictive policies affect the
improvement of the situation in the public finance
sector from the long-term perspective, contributing
to moderate economic growth.
Benos N. (2009) examining the impact of
fiscal policy on economic growth in European
countries notes the importance of the structure of
public spending. After all, state budget expenditures
on infrastructure and defense have a positive impact
on economic growth, an increase in the tax burden
suppresses economic growth, and expenditures on
education and the social sphere in general do not
have a significant impact on economic
development. In other words, Benos N., just as
Antonio D., emphasizes the importance of capital
expenditures for economic development, which we
also agree with, forasmuch as the development of
the country’s infrastructure leads to the growth of
all industries involved in its construction and
afterwards in maintenance. Even 90 years after F.
Roosevelt’s policy aimed at developing
infrastructure through the construction of railways,
currently this approach remains relevant, however,
it provides for the construction of autobahns, freight
and passenger rail or air hubs, tourism infrastructure
and services, etc.
Publications concerning the assessment of
fiscal rules occupy a rather important place in the
study of the role of fiscal policy in economic
development. For instance, Działo J. (2012)
examines the effectiveness of fiscal rules in the
European Union and Poland in the process of
consolidating public finances. According to the
author’s viewpoint, the use of fiscal rules has a
positive impact on economic growth and
macroeconomic stability, forasmuch as they allow
reducing excessive political pressure on the state
budget towards increasing its deficit and public debt
in order to finance political programs. We agree
with Działo J. that fiscal rules increase the level of
budgetary discipline and decrease the level of
populism in fiscal policy. However, this does not
always contribute to economic development,
forasmuch as fiscal consolidation may lead to a
recession or a decline in economic growth. Nizioł
K. (2018), while studying the fiscal rule in Poland,
proves that, in addition to fiscal discipline in the
field of public spending, the fiscal rule effectively
limits the growth of public debt, which has a
positive effect on macroeconomic stability.
Investigating the effectiveness of Poland’s
fiscal policy, the economist Janikowski Ł. (2018)
emphasizes the need to create a fiscal buffer in the
event of deteriorating economic conditions through
a strong fiscal policy through compliance with
fiscal rules, in particular, the fiscal rule on public
debt. At the same time, according to the author’s
viewpoint, fiscal rules will be effective only if the
deputies cannot change the law overnight, that is,
the scholar draws attention to the need to maintain
stability in the context of the application of fiscal
rules.
The work of the Polish scientist Owsiak S.
(2016) deserves considerable attention, in which a
thorough analysis of the development of the Polish
tax system has been conducted and a number of key
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conclusions have been made, namely: Poland’s tax
policy is characterized by moderate fiscalism;
shrinkage of tax thresholds for personal income tax
has had a negative impact on state budget revenues,
and, therefore, Poland needs to expand the number
of such “thresholds” to the level of advanced
countries with long-continued tax traditions, where
there is a progressive tax scale; the reconstruction
of the tax system should be aimed to support a
relative balance between direct and indirect taxes,
which will make it possible to return to the greater
role of direct taxes in reducing excessive income
inequality in the society; the effectiveness of the tax
system and fiscal policy in general depends on the
people who implement this policy. The emphasis on
the subjects of the implementation of fiscal or tax
policy, in our opinion, is important in the process of
analyzing the effects of fiscal policy on economic
development, forasmuch as it takes into account the
qualitative component of policy.
When it comes to scientific research of the
fiscal policy of Ukraine in the context of its impact
on economic development, it is worth noting the
publication of Shevchuk V. and Kopych R. (2018),
in which the analysis of the effectiveness of fiscal
policy in Ukraine has been conducted. The scholars
have come to conclusion on the advisability of an
income-based financial consolidation policy in
Ukraine, forasmuch as better tax collection can
contribute to economic growth even in the short
term perspective.
A scientific work of Marshalok T. (2019)
on the study of fiscal policy in Ukraine through the
prism of economic cycles is an in-depth
investigation; its main conclusion lies in the fact
that Ukraine due to subjective and objective reasons
has very limited financial resources for fiscal
stimulation of economic growth. However, in order
to increase the effectiveness of fiscal policy in
Ukraine, it is necessary to adhere to fiscal
discipline, to ensure the continuation of fiscal
decentralization policy in combination with fiscal
consolidation; to reduce the level of control over the
sphere of production; to debureaucratize the
relations between the state and business; to increase
the level of efficiency of tax authorities, etc.
Grazhevskaa N. and Virchenkoa A. (2014)
in their research prove the significant dependence
of the effectiveness of the mechanism of fiscal
policy transfer in the Ukrainian economy on such
institutional factors as public expenditure
management, consumer expectations and the level
of fiscal decentralization.
The Research Methods
The following methods have been used in
the course of the research, namely:
- synthesis analysis - in the process of
studying the scientific literature and determining
the directions of the impact of fiscal policy on
economic development;
- economic and statistical analysis and
comparison - while studying the dynamics of
economic development of Ukraine and Poland;
- economic and mathematical method -
while studying of correlation relationships between
indicators of economic development and indicators
of fiscal policy in Ukraine and Poland;
- generalization – in order to form
scientific-theoretical and practical
recommendations for improving the fiscal policy of
Ukraine in view of the experience of Poland.
3. Results of the Research
The comparative characteristics of the
fiscal policy of economic development of Poland
and Ukraine will not be complete if we leave
untouched the basic indicators determining the
economic development of these countries (Table 1).
Thus, the dynamics of GDP and the dynamics of
GDP per capita are such indicators, forasmuch as
they indicate the overall level of economic
development. According to data of Table 1, Poland
is four to five times better than Ukraine in terms of
GDP and GDP per capita, which is a phenomenal
result taking into account the common historical
past (as of 1990, Poland’s GDP was 69, 98 billion
USD and Ukraine’s GDP was 81,46 billion USD)
and almost the same starting conditions for
economic development after the collapse of the
USSR.
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Table 1
Dynamics of some indicators of economic development of Poland and Ukraine in 2004-2019
Indicators
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
GDP of Poland GDP,
billion USD
306,2
344,7
429,2
533,6
440,3
479,8
528,2
498,4
526,7
542,4
477,7
472,6
526,7
587,1
595,8
GDP of Ukraine GDP,
billion USD
86,1
107,8
142,7
180,0
117,2
136,4
163,2
175,8
183,3
131,8
90,6
93,3
112,2
130,8
153,8
GDP of Poland per
capita GDP, billion USD
8021,
5
9035,
4
11254,
5
13996,
0
11526,
1
12613,
0
13879,
6
13097,
3
13696,
5
14271,
3
12578,
5
12447,
4
13864,
7
15468,
5
15692,
5
GDP of Ukraine per
capita GDP, billion USD
1571,
7
1748,
9
3065,6
3887,2
2543,0
2965,1
3569,8
3855,4
4029,7
3104,6
2124,7
2187,7
2640,7
3096,8
3659,0
The share
of some
industries
in Poland’s
GDP, %
Industry
22,0
22,1
21,9
21,5
21,9
21,5
21,9
22,4
21,8
22,3
23,0
23,3
22,2
21,8
21,4
Agriculture
2,9
2,7
3,0
2,6
2,6
2,9
3,1
2,9
3,1
2,8
2,4
2,5
2,9
2,3
2,3
Constructio
n
6,7
6,7
6,8
7,2
7,6
7,4
7,6
7,0
6,5
6,9
7,1
6,2
6,2
6,7
6,5
Trade
16,4
16,4
16,1
15,9
16,7
17,0
16,2
16,8
17,0
15,8
15,7
15,5
15,5
15,6
15,5
The share
of some
industries
in
Ukraine’s
GDP, %
Industry
22,4
22,6
22,6
21,3
18,5
18,8
18,1
17,9
16,5
16,0
16,2
16,7
17,6
17,7
17,0
Agriculture
8,9
7,2
6,3
6,5
6,9
7,4
8,2
7,8
8,7
9,6
10,8
12,5
11,2
10,6
9,9
Constructio
n
3,9
4,1
4,5
3,3
2,6
3,3
3,0
2,8
2,5
2,2
2,1
2,2
2,4
2,3
2,7
Trade
12,2
12,1
12,6
13,1
13,6
14,5
15,0
14,4
14,6
13,3
13,8
14,0
13,4
13,9
13,3
The
structure of
export in
Poland, %
Raw
materials
26,9
26,9
26,5
26,4
23,6
25,3
25,9
27,4
26,4
25,2
23,7
22,4
22,6
22,4
21,1
Processing
industry
73,1
73,1
73,5
73,6
76,4
74,7
74,1
72,6
73,6
74,8
76,3
77,6
77,4
77,6
78,9
The
structure of
import in
Poland, %
Raw
materials
30,5
30,0
30,5
30,7
27,8
29,7
32,3
32,6
31,2
30,0
26,8
25,8
27,2
28,1
26,4
Processing
industry
69,5
70,0
69,5
69,3
72,2
70,3
67,7
67,4
68,9
70,0
73,3
74,2
72,8
71,9
73,6
The
structure of
Raw
materials
65,1
63,4
61,3
65,6
63,0
63,0
63,5
61,3
63,0
66,9
66,5
67,3
68,4
68,1
69,2
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export in
Ukraine, %
Processing
industry
34,9
36,6
38,7
34,4
37,0
37,0
36,5
38,7
37,0
33,1
33,5
32,7
31,6
31,9
30,8
The
structure of
import in
Ukraine, %
Raw
materials
45,6
43,7
42,5
44,9
50,1
50,5
50,5
46,8
45,5
45,0
44,1
35,5
38,1
37,9
34,4
Processing
industry
54,4
56,3
57,5
55,1
49,9
49,5
49,5
53,2
54,5
55,0
55,9
64,5
61,9
62,1
65,6
Index of economic
complexity of Poland, %
25,0
23,0
21,0
21,0
21,0
23,0
21,0
24,0
23,0
22,0
22,0
23,0
21,0
23,0
н/д
Index of economic
complexity of Ukraine,
%
37,0
38,0
41,0
44,0
44,0
45,0
44,0
42,0
43,0
43,0
46,0
50,0
45,0
44,0
н/д
Coefficient of openness
of the economy of
Poland, %
62,3
68,2
70,6
71,7
65,0
70,4
76,2
76,9
78,8
82,6
83,3
85,8
87,8
91,1
89,4
Coefficient of openness
of the economy of
Ukraine, %
98,2
92,6
91,8
99,6
90,5
99,1
108,8
106,6
97,7
102,8
108,2
105,6
104,0
99,2
90,8
Source: calculated by the author on the basis of data: State Statistics Service of Ukraine: national accounts; Bank danych Makroeconomicznych: Handel
zagraniczny; Worldbank: World Development Indicators.
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Taking into account the theoretical
concepts of representatives of the German historical
school, Keynesianism, studies of Rainert E., Nair
Ch., Acemoglu D., Robinson J. and other
economists, who, based on the study of the
economic history of the world and the history of
economic policy of the advanced countries of the
world, have come to the conclusion that the
development of industry lies at the heart of
economic development, namely production with a
high level of added value. It should be noted that it
is due to the development of industry that Poland
has achieved such high results in terms of GDP
dynamics and GDP per capita.
Comparing the indicators of economic
development of Ukraine and Poland, a noteworthy
detail is that there are negative trends in the
structure of GDP in Ukraine, where the share of
industry over the past 12 years has decreased by 5%
to 17% of GDP, in Poland, on the other hand, this
indicator is stable and ranges from 21-22% of GDP.
Beyond that, it should be noted that the share of
construction in Poland’s GDP is significantly
higher than in Ukraine, which indicates the focus of
Poland’s economic policy on the development of
infrastructure. A high share in the structure of
Ukraine’s GDP is occupied by agriculture, which is
quite objective taking into account the area of
agricultural land and soil fertility. However,
agriculture is not an innovative industry that
produces goods with high added value and can
contribute to rapid economic growth. Trade in these
two countries is actually at the same level in the
structure of GDP.
The structure of foreign trade in goods is an
important indicator. After all, Ukraine’s economy
demonstrates a gradual transformation into a raw
material appendage of advanced countries,
forasmuch as the share of raw materials in the
structure of exports by the end of 2019 amounts
69,2%. By contrast, in the structure of Poland’s
exports, 78,9% is accounted for exports of industrial
products. As for imports, the indicators here are also
quite unambiguous, forasmuch as in the structure of
imports of Ukraine, 34,4% is accounted for imports;
previously this indicator was about 50%, while in
Poland, imports of raw materials account for 26,4%
of total imports of goods. The high share of exports
and imports of raw materials in Ukraine makes its
economic development dependent on raw material
cycles (Figure 1).
Figure 1. Dynamics of price indices on raw
materials and GDP of Poland and Ukraine in
2004-2019
Source: calculated by the author on the
basis of data: State Statistics Service of Ukraine:
national accounts; Bank danych
Makroeconomicznych: rachunki narodowe;
Commodity Metals Price Index Monthly Price;
FAO Food Price Index.
According to data of Figure 1, GDP of
Ukraine almost repeats the dynamics of grain
prices; it is confirmed by the correlation coefficient
between these indicators, which is 0,8821, while the
correlation coefficient for Poland’s GDP is
significantly below – 0,5065. Regarding the
correlation coefficients for the metal price index of
GDP of Ukraine and Poland, it is 0,3310 and
0,1398, respectively. Changes in the dynamics of
prices for raw materials significantly affect the
profitability of enterprises of ferrous metallurgy and
agriculture in Ukraine which are the main exporters
of raw materials to international commodity
markets; this, in turn, negatively affects the
dynamics of GDP.
Conducting a brief analysis of the economic
development of Ukraine and Poland, it is worth
noting the dynamics of such an indicator as the
index of economic complexity, which reflects the
number of complex products in the country’s
production. The complexity of the product means a
measure of the amount of technology used to
manufacture the product and expresses the value
added. According to this indicator, Poland twice
exceeds Ukraine, which means that its industry has
a higher level of technology, and manufacturing
plants produce goods with a higher level of value
added, which is the basis of economic development.
In addition, the coefficient of openness of the
economy is a very important indicator for
comparing Ukraine and Poland in terms of the level
of economic development, forasmuch as it reflects
the ratio of the volume of foreign trade in goods and
services to GDP. According to this indicator,
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Ukraine is also inferior to Poland, and its value,
which reaches 100%, indicates the actual absence of
the domestic market, because production is export-
oriented and consumption is imported.
Thus, based on the analysis of the above-
mentioned trends in economic development of
Poland and Ukraine, the inference should be drawn
that Ukraine needs to pursue a policy of stimulating
the development of industry and production of
goods with value added, reduce the share of raw
materials in exports and increase the share of
capital-intensive industries. Achieving these goals
is impossible without the implementation of
effective fiscal policy and taking into account
international experience in this area.
Therefore, a comparison of the fiscal
policies of Poland and Ukraine, in our opinion,
should take place taking into account the existing
problems and opportunities of the economies of
these states. By the way, it is important to identify
the vectors of fiscal policy in order to answer the
question of whether fiscal policy takes into account
existing trends in the economy and whether it is
aimed at creating conditions for further economic
development.
In a general sense, fiscal policy is the
regulation of the state’s revenues and expenditures
in order to influence aggregate demand and national
income or gross domestic product. In practice, fiscal
policy is implemented through deficit financing of
aggregate demand, establishing the structure of
state budget expenditures and public investments,
pursuing debt policy, implementing income policy
and administering taxes. Actually, by using these
instruments, we will carry out a comparative
analysis of the fiscal policy of economic
development of Poland and Ukraine applying the
methods of correlation analysis (Tables 2-3).
Taking into account the postulates of
Keynesian theory, the analysis of deficit financing
of aggregate demand is one of the directions of the
analysis of the fiscal policy of Poland. However, the
Polish government did not use this method for the
period from 2004 to 2019, as evidenced by the data
in Table 2, forasmuch as the indicator of correlation
between the dynamics of the state budget deficit and
the dynamics of GDP is not significant. Table 2
Correlation matrix of indicators of fiscal policy of Poland’s economic development in 2004-2019
GDP, billion USD
State budget
deficit, billion USD
Capital
expenditures
Capital
expenditures
including financing
of the EU Funds
and co-financing of
the EU projects
Current expenses
External public
debt, billion USD
Domestic public
debt, billion USD
Total public debt,
billion USD
Tax revenues,
billion USD
VAT refunds,
billion USD
The level of the
shadow economy,
%
GDP, billion
USD
1
State budget
deficit, billion
USD
-
0,2789
1
Capital
expenditures
0,7145
-
0,2147
1
Capital
expenditures
including
financing of the
EU Funds and
co-financing of
the EU projects
0,6141
-
0,1275
0,7814
1
Current expenses
0,9184
-
0,1774
0,7714
0,8493
1
External public
debt, billion USD
0,7887
0,0333
0,4209
0,1984
0,5889
1
Domestic public
debt, billion USD
0,9514
-
0,0923
0,7006
0,6874
0,9528
0,7359
1
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Total public debt,
billion USD
0,9542
-
0,0524
0,6441
0,5536
0,8821
0,8807
0,9688
1
Tax revenues,
billion USD
0,9649
-
0,4285
0,7755
0,7075
0,9383
0,6246
0,9155
0,8690
1
VAT refunds,
billion USD
0,8652
-
0,5396
-
0,0094
-0,4228
0,5671
0,4760
0,4580
0,5784
0,7250
1
The level of the
shadow economy,
%
-
0,6731
0,3696
-
0,5064
-0,1171
-
0,4131
-
0,6717
-
0,4782
-
0,5803
-
0,6061
-
0,6065
1
Source: calculated by the author on the basis of data: Bank danych Makroeconomicznych; Sprawozdanie z
wykonania budżetu państwa.
At the same time, based on the analysis of
the structure of public expenditure and debt policy,
it should be noted that in Poland, the principle of
functional finance is used, which is described in A.
Lerner’s theory. Thus, the data in Table 2 evidence
that the correlation coefficient between capital and
current expenditures of the state budget and GDP is
significant. Herewith, the higher correlation
coefficient is observed between current
expenditures and GDP, which is quite objective,
because the time lag of the impact of current
expenditures on GDP is less than the time lag of the
impact of capital expenditures used to finance
economic infrastructure, which is the core basis of
economic development. However, the
implementation of infrastructure projects takes
much longer time than the growth of final
consumption, which is provided by increasing
current expenditures.
Analyzing the policy of expenditures of
Poland’s state budget, it should be noted a very
important element that has no analogues in Ukraine,
namely: the financing of infrastructure projects at
the expense of the funds of the European Union and
co-financing of projects of the European Union at
the expense of the Polish budget. Such measures
automatically increase the share of capital
expenditures in the structure of the state budget
(Figure 2).
Figure 2. The structure of expenditures of the
state budgets of Poland and Ukraine by
elements in 2004-2019
Source: calculated by the author on the basis of
data: Sprawozdanie z wykonania budżetu państwa;
Budget of Ukraine.
The data in Figure 2 indicate that in 2004-
2009 Ukraine dominated Poland in terms of the
share of capital expenditures in the total
expenditures of the state budget. However,
accession of Poland to the European Union in 2004
allowed using two additional clauses of capital
expenditure, namely: expenditures of the European
Union Funds and allocation of funds for co-
financing of projects implemented in accordance
with the EU convergence policy. Therefore, since
2004, Poland has been gradually increasing capital
expenditures at the expense of the European Union.
The example of Poland is especially indicative in
the context of overcoming the consequences of the
financial and economic crisis of 2008-2009, when
capital expenditures were increased in order to
finance the development of infrastructure (primarily
transport), which made it possible to attract related
sectors of the economy by raising the level of
economic activity and aggregate demand. At the
same time, it should be noted that fiscal policy is not
only a change in the volume or share of financial
resources directed to the economy, but primarily the
decisions of people who are in power at a particular
time. No wonder, according to the Greek word,
politics is the art of governing. The increase in
capital expenditures due to an increase in funds for
co-financing the EU projects and attracting funds
from the EU funds provides for targeted financing
of the infrastructure development of the Polish
economy, in particular, the construction of roads
and highways, social institutions, industrial
complexes and shopping hubs; consequently, this
directly affects the share of construction in GDP,
and, thus, contributes to economic development.
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In contradiction from Poland, Ukraine does
not have the opportunity to raise funds from the EU
funds, the targeted use of which is strictly controlled
(including corruption); as a result, this does not
increase capital expenditures in the face of crisis in
the national economy. Such trends can be clearly
observed in Figure 2, where during the economic
crisis of 2014-2017 in Ukraine due to the war with
the Russian Federation, the share of capital
expenditures approached zero.
According to data of Table 2, debt policy
plays an important role in the fiscal policy of
Poland’s economic development, forasmuch as the
correlation indicators between total public debt and
GDP have a strong relationship (R2=0,9542), while
the correlation indicators of domestic public debt
are higher than the correlation indicators of external
public debt and GDP.
In contrast with Poland, the fiscal policy of
economic development of Ukraine is radically
different (Table 3); after all, the basic emphasis is
placed on deficit financing, the dynamics of capital
expenditures has a medium correlation with GDP,
and debt policy indicators are almost not correlated
with the dynamics of GDP.
Table 3
Correlation matrix of indicators of fiscal policy of economic development of Ukraine in 2004-2019
GDP, billion USD
State budget deficit,
billion USD
Capital expenditures
Current expenses
External public debt,
billion USD
Domestic public debt,
billion USD
Total public debt,
billion USD
Tax revenues, billion
USD
VAT refunds, billion
USD
The level of the
shadow economy, %
GDP, billion USD
1
State budget deficit, billion
USD
0,5131
1
Capital expenditures
0,5555
-
0,1586
1
Current expenses
0,9504
0,6388
0,3211
1
External public debt, billion
USD
0,2955
0,2813
-
0,2897
0,5190
1
Domestic public debt, billion
USD
0,4085
0,5196
-
0,3203
0,6396
0,9051
1
Total public debt, billion
USD
0,3553
0,3990
-
0,3110
0,5877
0,9803
0,9713
1
Tax revenues, billion USD
0,9675
0,4131
0,4971
0,9427
0,4354
0,4744
0,4641
1
VAT refunds, billion USD
0,9187
0,5679
0,3760
0,9368
0,5002
0,5744
0,5469
0,9162
1
The level of the shadow
economy, %
0,1365
0,6053
-
0,5482
0,3032
0,4128
0,4185
0,4255
0,1552
0,2096
1
Source: calculated by the author according to the data of State Statistics Service of Ukraine; Budget of Ukraine.
As the data in Table 3 evidence, Ukraine’s
fiscal policy is based on deficit financing of
economic development. After all, there is an
average level of correlation relationship between
the dynamics of the state budget deficit and GDP,
as well as between the state budget deficit and
current expenditures, which in turn have a
significant correlation relationship with GDP. The
mean level of the relationship between the state
budget deficit and GDP can be explained by the
consequences of the economic crisis of 2014-2017
caused by the war with the Russian Federation and
internal political and economic imbalances, which
has had a negative impact on the dynamics of
macroeconomic indicators.
Comparing the policy of state budget
expenditures and the debt policy of Ukraine and
Poland, it should be noted that there is a clear and
constitutionally established debt fiscal rule in
Poland (limitation of public debt at the level of 60%
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of GDP and the use of intermediate triggers of
public debt - 50 and 55% of GDP). Along with this,
the fiscal rules of the EU supranational government
are in force (limiting the state budget deficit at 3%
of GDP, structural budget at 1% of GDP), which,
despite some criticism in Polish scientific circles,
ensure a sufficient level of fiscal discipline in the
country. At the same time, and what is especially
important, the Polish government is obliged to
comply with supranational fiscal rules by using the
following sound prudential practices, namely:
opening an excessive deficit procedure; directing
governments towards reducing structural deficits;
setting annual rates of debt reduction; the
government’s obligation to take fiscal rules into
account when conducting fiscal policy.
Therefore, analyzing the data in Table 2, we
can conclude about the successful fight against
political pressure towards motivating the
government to fulfill the populist wishes of deputies
in the field of financing social expenditures, which
constitute the basis of current expenditures of the
Polish state budget; after all, there is no correlation
relationship between the dynamics of the budget
deficit and the dynamics of current expenditures.
Ukraine also has certain fiscal constraints,
which are determined by the Budget Code of
Ukraine, namely: the state budget deficit for each
year of the medium term may not exceed 3 percent
of the projected nominal GDP of Ukraine for the
corresponding year; total public debt and
guaranteed state debt at the end of the budget period
can not exceed 60% of annual nominal Ukraine’s
GDP.
However, in contrast to Poland, where the
process of enforcing the rules is monitored by the
European Commission, in Ukraine, such measures
are not carried out in practice, which leads to a
violation of fiscal discipline. After all, based on the
data in Table 3, an intermediate level of correlation
relationship between the budget deficit and current
expenditures is observed, while there is no
correlation between the budget deficit and capital
expenditures.
In terms of debt policy, the data in Table 3
make it possible to come to conclusion concerning
debt financing of the budget deficit and the lack of
correlation between public debt and its structural
elements and GDP, however, the relative indicators
of public debt indicate a higher level of debt
dependence in Ukraine than in Poland (Figure 3).
Figure 3. Dynamics of debt policy indicators of
Poland and Ukraine in 2004-2019
Source: calculated by the author according to the
data of State Statistics Service of Ukraine; Bank
danych Makroeconomicznych.
According to data of Figure 3, the absence
of a debt rule in Ukraine led to a significant increase
in debt dependence in 2014-2018; after all, the ratio
of public debt to GDP exceeded 60%. In addition,
as contrasted with Poland, Ukraine’s debt policy is
aimed at attracting external debt, the share of which
in the total public debt is more than 60%, while in
Poland it is only 30-35%. The attraction of
Ukraine’s external public debt in foreign currency
has an objective explanation, taking into account
the openness of the national economy, dependence
on imports, primarily on energy resources.
However, in contrast to Poland, where all external
public debt is attracted on the international money
and capital markets, 20-30% of Ukraine’s external
public debt is the debt owed to international
financial institutions. In terms of the cost of
servicing external debt, borrowing from
international financial institutions is a justified
strategy for debt policy. However, it should be
noted that international financial institutions
provide loans to the state, which, in addition to
financial commitments, often involve political
commitments that may be contrary to national
interests, such as: increase of tariffs for communal
services without modernization of heat supply,
adoption of laws on land reform without creation of
proper infrastructure of regulation of the market of
agricultural lands; prohibition to impose export and
import duties on certain groups of goods, etc. From
these perspectives, the debt policy of Ukraine needs
to be optimized in order to reduce external debt
dependence on international financial and credit
organizations.
In addition, comparing the debt policy of
Poland and Ukraine, it should be noted that the
correlation relationship between debt policy and
Poland’s GDP is quite high, which indicates the
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debt financing of economic development and a high
level of conversion of public debt into economic
development. Herewith, the high share of domestic
debt in the structure of Poland’s public debt creates
opportunities for the government to carry out
mutual writing off debts in the event of an
aggravation of crisis phenomena in the economy.
In Ukraine, the situation is completely
different: the dynamics of public debt is not actually
related to the dynamics of GDP, which indicates the
inefficient use of debt resources for stimulating
economic growth.
In addition to expenditure and debt policies,
an important element of fiscal policy is revenue
policy, which is mainly implemented through tax
policy. Consequently, analyzing the data on the
correlation dependences of tax revenues and GDP
of Poland and Ukraine, respectively, we can
conclude about the significant role of taxes in the
economic development of states. Exactly the same
applies to VAT refunds as a tax benefit, the
dynamics of which has a significant correlation
relationship with the dynamics of GDP in both
countries.
Income policy, as an element of fiscal
policy, is important for economic growth,
forasmuch as it affects aggregate demand through
changes in tax rates, the mechanism of tax
administration and the formation of the structure of
tax revenues. Regarding the types of taxes, the tax
systems of Poland and Ukraine are approximately
the same. The differences lie in the application of
taxes that are insignificant in terms of mobilization
of funds to the Polish budget, such as: forest tax,
vehicle tax, tax on games, etc.
There are differences in the personal
income tax, which in Poland has two thresholds: if
earnings during the year have amounted to less than
85 528 PLN, the tax rate is 18%; if earnings during
the year have amounted to more than 85 528 PLN,
the tax is 32%. That is, there is a simplified
progressive system of personal income taxation in
Poland, which, on the one hand, takes into account
the principles of social justice and on the other hand
- leads to higher budget revenues. In Ukraine, there
is a simple system of personal income taxation,
which provides for the use of a tax rate of 18%
regardless of the amount of wages, which
introduces significant imbalances in the tax burden
on employees who receive the minimum wage.
In terms of the structure of tax revenues, in
our opinion, it is ineffective both in Poland and in
Ukraine, forasmuch as consumption taxes are more
than 70% and 80%, respectively. The high level of
fiscalization of consumption is due to the fact that
the basis of the GDP of both countries is made up
of final consumption expenditures, and gross capital
formation occupies an insignificant share (Figure
4).
Figure 4. Dynamics of the share of consumption
taxes and final consumer expenditures in
Ukraine and Poland in 2004-2019
Source: calculated by the author according to the
data of State Statistics Service of Ukraine; Bank
danych Makroeconomicznych.
According to data in Table 4, the share of
consumption taxes exceeds in Ukraine the same
indicator in Poland by 10-12%. Along with this, the
share of final consumer expenditures in GDP is
about 85%, which indicates negative trends in
economic development and the short-term effects of
fiscal policy. The increase in the share of
consumption taxes indicates a decrease in the base
of taxes on income, and this, in turn, gives grounds
for the conclusion about a decrease in the number
of enterprises and the level of employment in
Ukraine. What is more, the high level of final
consumption expenditures in Ukraine indicates a
low share of gross capital accumulation, which is
the basis of economic growth, and, therefore,
requires fiscal policy to use instruments that would
stimulate production. Such instruments include
public investments, which are implemented through
the mechanism of capital expenditures within the
framework of state development programs,
providing targeted financing, as well as preferential
taxation of certain types of entrepreneurial activity.
We have considered the trends of capital
expenditures hereinbefore, however, it should be
noted that the results of such expenditures in Poland
are higher than in Ukraine, forasmuch as the lion’s
share is implemented at the expense of the
European Union Funds and through co-financing
mechanisms of the EU projects under strict
monitoring for targeted use.
Regarding tax incentives, both in Poland
and in Ukraine a number of tax benefits are used,
among which it is worth noting those that have
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similar goals, namely: exemption from taxation of
educational, cultural, medical and sports
institutions; exemption from taxation of medical
technologies and medicines; exemption from
taxation of goods for national security and defense.
However, there are quite significant differences in
the sphere of preferential taxation of industry and
agriculture (Tables 4-5).
Table 4
Groups of the basic tax incentives for the economy and agriculture in Poland and their features
Groups of the tax incentives
Role for economic development
Incentives for agricultural enterprises
Exemption from taxation for the purchase of land up to 100 hectares in
order to create a new farm or expand an existing one.
Tax incentives are aimed at
encouraging productive and
organic farming, forasmuch as
farms are again exempt from
almost all types of tax.
In our viewpoint, the investment
incentive applied to farms and
family farms that build livestock
buildings is quite important for
the development of animal
husbandry in Poland. In addition,
animal husbandry, in contrast to
crop production, has a higher
degree of added value, and also
contributes to the introduction of
organic fertilizers into the soil,
which allows maintaining their
quality at the proper level.
Incentive for the development of
agritourism is quite an innovative
benefit in the Polish tax system.
Stimulating the development of
wastelands, land reclamation is
also an important measure of the
state for the development of
agriculture as one of the drivers
of economic growth and
employment growth.
Investment incentive for farmers for the construction or modernization of
livestock buildings for breeding and keeping farm animals and
environmental protection facilities; construction of drainage structures and
purchase of a water supply device for the farm; purchase of devices used
for production purposes for natural energy sources (wind, biogas, sun,
falling water). The investment incentive is granted after the completion of
the investment and consists of a deduction from the agricultural tax on land
located in the commune where the investment was made - in the amount of
25%, documented using investment accounts. However, incentives for the
same investment cannot be used for more than 15 years.
Tax incentives for farmers in mountainous areas and tax credits in the event
of a natural disaster.
Income from the sale of farm real estate is exempt from taxation.
Income received from agritourism is exempt from personal income tax (rent
of rural houses, rooms in villages, etc.).
Income from the sale of processed agricultural products is exempt from
personal income tax.
Remuneration received by members of agricultural production cooperatives
for the use of land contributions by cooperatives is exempt from personal
income tax
A tax incentive for agriculture is applied, which consists in reducing the tax
in the first year by 75%, and in the second year by 50% in the case of
acquiring land or expanding an existing farm with an area of up to 100
hectares (5 years), land resulting from the development of wastelands (5
years), and land after exchange or consolidation (1 year).
Parts of arable land, meadows and pastures, as a result of soil reclamation
of which led to the destruction of crops as a result of drainage works, were
exempted from taxation by the agricultural tax. The exemption covers the
tax year in which the crops have been damaged.
Incentives for non-agricultural enterprises
Accelerated depreciation. It is applied for small taxpayers (the amount of
income from the sale of which for the previous year does not exceed 1,2
million EUR) and those taxpayers who start production. It is applied for the
purchase of intangible assets, except for passenger vehicles. The write-off
limit for depreciation may not exceed 50 000 EUR during the tax year.
Tax incentives for non-
agricultural enterprises are aimed
at supporting investment
activities carried out by small
taxpayers and taxpayers who
start their business. Such
measures of the state encourage
the creation of start-ups, the
modernization of already
established enterprises that
positively affects a business
climate.
Expenses for the purchase of new technologies by taxpayers engaged in
non-agricultural activities are exempt from taxation.
Settlement of losses for previous years. Possibility to write off tax payments
in the current tax year and for the next 5 years, but not more than 50% in
case of losses on a particular source of income in previous years.
Subsidies from state local budgets are exempt from taxation.
Tax credit. Taxpayers who have started a business for the first time, after
submitting the relevant declaration and fulfilling the conditions provided by
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the Law on PIT (including support for a certain level of employment), are
entitled to an annual exemption from the obligation to pay advances on
income tax.
Benefits to support innovation
are important; they are applied to
enterprises of various forms of
ownership and of various sizes.
Benefits for producers of
biocomponents, biofuels,
electricity from renewable
sources also stimulate innovation
and production of goods with a
high share of value added.
Income received from activities in special economic zones on the basis of
appropriate permits is exempt from taxation. A limited state aid quota is
used.
Biocomponents are exempt from excise duty intended for liquid fuels, fuels
with biocomponents, biocomponents that make up an independent fuel.
Production of electricity from renewable sources is exempt from excise
duty.
Source: compiled by the author on the basis: Cel i mechanizm preferencji podatkowych.
Analyzing the types of tax incentives for
agricultural and non-agricultural enterprises in
Poland, we can conclude that their concept is
consistent with the general trends in the
development of the Polish economy, forasmuch as
none of the incentives is aimed at stimulating raw
materials’ production. On the contrary, the existing
tax incentives are aimed at the development of
infrastructure, innovation and processing industry
with a high share of added value. It is this approach
to the implementation of the entire fiscal policy of
Poland has led to a high level of economic
development compared to Ukraine.
As for Ukraine, the tax policy also provides
a number of benefits that are used for various
sectors of the economy. Analyzing the Directory of
tax benefits of Ukraine, we can conclude that in
addition to benefits for education, culture,
medicine, sports and social sphere, a great number
of benefits are used for industries involved in trade
under interstate agreements on free trade zones, or
within other interstate agreements. However, it is
rather difficult to analyze the importance of such
benefits for economic development, because, on the
one hand, there are no necessary statistical data, and
on the other hand, revisions will require the effects
for the national economy from the activities of the
existing free trade zones, which will be left by us
for further scientific research. In addition, it is
worth noting the temporary tax benefits that apply
to the production and trade of goods intended for
national defense and for the anti-terrorist operation
in eastern Ukraine.
Tax incentives for enterprises are very
specific and, in our opinion, do not always
correspond to the national objectives towards
stimulating the economic development of Ukraine.
Along with this, it should be noted that at the
request of the International Monetary Fund, the
special tax regime for activities in the field of
agriculture and forestry, as well as fisheries has
been canceled. Consequently, in Ukraine, as
contrasted with Poland, there are no tax incentives
for the development of agriculture. In our
viewpoint, it negatively affects the development of
farms, family farm units, agricultural cooperatives,
the development of animal husbandry and the state
of soils, as well as the social-economic situation in
rural areas. The lack of benefits for agricultural
enterprises leads to the development of high-margin
agricultural raw materials production or primary
processing, which does not help reduce the level of
dependence of the Ukrainian economy on raw
material cycles. In addition, the lack of support for
animal husbandry, the development of agricultural
infrastructure negatively affects the quality of the
soil, due to the low level of organic fertilization.
Consequently, in the long term, Ukraine runs the
risk of losing the benefits of fertile black soil, which
will certainly affect the pace of economic
development.
Let’s analyze the tax incentives for non-
agricultural enterprises in Ukraine by using Table 5.
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Table 5
Groups of the basic tax incentives for the economy of Ukraine and their features
Tax incentives in Ukraine
Role for economic development
Temporarily, until January 1, 2025, the profit of the enterprises - the
subjects of aircraft construction which are subject to norms of article 2 of
the Law of Ukraine “On development of the aircraft industry” is exempt
from taxation. The freed up funds (tax amounts that are not paid to the
budget and remain at the disposal of the taxpayer) are used for research and
development work on aircraft construction, creation or re-equipment of
material and technical base, increase in production, introduction of new
technologies. The use of such funds must be related to the activities of the
taxpayer, the income from which is exempt from taxation.
Analyzing the available tax
benefits for Ukrainian
enterprises, we can conclude that
tax incentives for economic
development in Ukraine are
practically not implemented.
Thus, in the list of tax benefits,
only four groups of tax
incentives can be distinguished
that can contribute to economic
growth. These are benefits for
aircraft construction and the
space industry, for horticulture
and viticulture, for carrying out
scientific and research activities,
for the import of vehicle bodies
for the production of cars in
Ukraine.
Without contradiction, the
aircraft and space industries are
capital-intensive sectors of the
economy with a high share of
value added, however,
stimulating the development of
one industry will not have any
impact on the overall economic
growth of Ukraine. The same
applies to the support of
horticulture and viticulture.
It is worth noting the benefit for
taxpayers, whose annual income,
determined by the accounting
rules for the last annual reporting
period, does not exceed three
million hryvnias, forasmuch as
this tax preference somewhat
facilitates the development of
small and medium-sized
businesses.
Privileges for the import of
electric vehicles and biofuel
production may have a positive
effect on the development of
these sectors of the economy,
however, not on the overall
economic development.
Benefit concerning tax
exemption for the import of car
bodies is also ineffective,
forasmuch as it stimulates
For the period until December 31, 2021, the zero interest rate is applied to
income taxpayers whose annual income, determined according to the
accounting rules for the last annual reporting period, does not exceed three
million hryvnias and the amount of salary (income) accrued for each month
of the reporting period to each of the employees who are with the taxpayer
in labor relations is not less than two minimum wages, the amount of which
is established by law.
Temporarily, until January 1, 2022, transactions on supply of coal and / or
products of its commodity enrichment in the customs territory of Ukraine
are exempt from value added tax.
Temporarily, until December 31, 2022, transactions on supply of vehicles
equipped exclusively with electric motors (one or more) in the customs
territory of Ukraine are exempt from value added tax.
Transactions on the sale of liquefied gas at specialized auctions for the
needs of the population are exempt from excise tax in the manner
established by the Cabinet of Ministers of Ukraine.
The excise tax is levied at the rate of 0 UAH per 1 liter of 100% alcohol
from bioethanol used by enterprises for the production of motor gasolines
containing bioethanol, ethyl tert-butyl ether (ETBE), and other additives
based on bioethanol.
Transactions on the sale of bodies for passenger vehicles in the customs
territory of Ukraine are exempt from taxation, subject to the subsequent
manufacture of vehicles from them.
The financial result before taxation is reduced: by the amount of the
negative value of the object of taxation of the previous tax (reporting) years.
Land tax is not paid for land plots of agricultural enterprises of all forms of
ownership and farms occupied by young orchards, berries and vineyards
prior to their entry into period of fructification, as well as hybrid plantations,
gene pool collections and nurseries of perennial orchards.
Transactions on the supply of services for fundamental investigations,
research and development activities are exempt from taxation if such
services and / or works are supplied by a person who directly receives
payment for their value from the account of the body providing treasury
services to the budget.
Temporarily, until January 1, 2023, the subjects of space activities, which
are subject to the Law of Ukraine “On Space Activities”, are exempt from
value added tax on transactions for the supply in the customs territory of
Ukraine of the results of scientific and research, development and
construction works, which are performed for the needs of space activities.
In order to apply this privilege, the Cabinet of Ministers of Ukraine shall
establish the procedure for monitoring the register of scientific and
research, development and construction works.
DESIGN, CONSTRUCTION, MAINTENANCE
DOI: 10.37394/232022.2023.3.5
Iaroslav Petrunenko, Ruslan Lavrov,
Vasyl Kuybida, Maksym Slatvinskyi,
Andrii Zelenskyi, Svitlana Oneshko
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Temporarily until January 1, 2022, transcations on the supply of waste and
scrap of ferrous and non-ferrous metals, as well as paper and cardboard for
recycling (waste paper and waste) are exempt from taxation. Lists of such
waste and scrap of ferrous and non-ferrous metals are approved by the
Cabinet of Ministers of Ukraine.
imports rather than domestic
production, and, therefore, has
little effect on economic growth.
Most of the tax incentives in
Ukraine are aimed at stimulating
the production of raw materials,
namely: ethyl alcohol; petroleum
products; coal; waste and scrap
of ferrous and non-ferrous
metals; raw tobacco materials.
Temporarily, until January 1, 2022, export transactions under the customs
regime for the export of waste and scrap of ferrous and non-ferrous metals,
as well as paper and cardboard for recycling (waste paper and waste) are
exempt from taxation. Lists of such waste and scrap of ferrous and non-
ferrous metals are approved by the Cabinet of Ministers of Ukraine.
Petroleum products that can be sold as raw materials for production in the
chemical industry at a zero rate of excise tax.
Transactions on sale of tobacco raw materials to tobacco fermentation
plants by persons who produce tobacco raw materials in the customs
territory of Ukraine are exempt from taxation.
Transcations on sale of fermented (processed) raw tobacco materials by
tobacco-fermentation plants to manufacturers of tobacco products are
exempt from taxation.
Source: compiled by the author on the basis of Directory of tax benefits.
Based on the analysis of tax incentives for
Ukrainian enterprises, we can conclude that there is
no effective strategy for fiscal policy in particular,
and a strategy for the development of the state in
general. After all, the existing tax incentives do not
make it possible to modernize the national economy
from a raw material appendage of the advanced
countries of the world to a competitive, innovative
and technological economy, an industry that
produces goods with a high level of added value.
Nowadays, the fiscal policy of Poland can
be an exemplary example for the government of
Ukraine in the field of optimization of fiscal policy.
However, while borrowing the experience of
Poland, one should not forget that those effective
recipes for fiscal policy can work in Ukraine only if
the legal support is at the same level. This refers to
the quality of legislation, the efficiency of the
judiciary and the efficiency of tax authorities. This
conclusion confirms the correlation relationship
between the level of the shadow economy and the
GDP of Poland and Ukraine (see tables), forasmuch
as in Poland the decrease in the level of the shadow
economy (R2 = -0.6731) leads to GDP growth,
however, there is no relationship between such
indicators in Ukraine.
4. Discussion
A comparative analysis of the fiscal policy
of economic development of Poland and Ukraine
based on the application of a wide range of statistics
has made it possible to conclude that there are
fundamental differences between the regulatory
approaches of both countries. The fact remains that
Poland’s fiscal policy is aimed at stimulating the
development of infrastructure, industry with a high
level of added value, efficient agriculture by
pursuing a policy of “functional finances” with a
high level of conversion of public debt into
economic growth. Herewith, in Ukraine, the effects
of fiscal policy on economic growth are
insignificant, except for tax revenues and VAT
refunds. Such tendencies can be connected with the
facts of lobbying by deputies of interests of
corporations dealing with raw materials during
drawing up of the State Budget of Ukraine.
Marshalok T. () holds the same opinion when
studying the fiscal policy of Ukraine and
Janikowski Ł., substantiating the importance of
compliance with fiscal rules.
The conducted economic and mathematical
analysis of expenditures of the State Budget of
Ukraine confirms the conclusion of Grazhevskaa
N., Virchenkoa A. (2014) that the management of
public expenditures is at a low level. Admittedly,
more than 90% of expenditures from the State
Budget of Ukraine are current expenditures; capital
expenditures aimed at infrastructure development
and laying the foundations for long-term economic
development in a certain period of time amounted
to 2-3%.
The academic paper confirms the
conclusions of Działo J. on the importance of using
fiscal rules in Poland and the positive impact of
limiting the growth of public debt on
macroeconomic stability. However, at the same
DESIGN, CONSTRUCTION, MAINTENANCE
DOI: 10.37394/232022.2023.3.5
Iaroslav Petrunenko, Ruslan Lavrov,
Vasyl Kuybida, Maksym Slatvinskyi,
Andrii Zelenskyi, Svitlana Oneshko
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time, the correlation analysis has showed that
Poland’s GDP actually has a direct dependence on
the dynamics of the domestic public debt. This
conclusion is important for Ukraine, where it is
advisable to introduce the rule of conversion of
public debt into economic development, that is, to
carry out public borrowing not only to finance the
budget deficit, but specifically for the
implementation of a targeted state program towards
stimulating economic growth. In this case, fiscal
policy will have a greater effect on economic
growth.
In addition, analyzing the experience of
Poland in the field of public expenditure
management, it is worth noting the significant role
of the European Union in financing them through
direct payments from the EU funds and by
attracting co-financing from the budget of Poland
for the implementation of the EU projects. Such
collaboration in the capital expenditures of the state
budget has allowed Poland to significantly improve
its economic and transport infrastructure over the
past 15 years, which in turn has created a basis for
long-term economic development.
Ukraine does not have such opportunities to
attract grants from the European Union in order to
increase capital expenditures in development;
however, the high level of the shadow economy
opens up prospects for fiscal consolidation in the
area of revenues by increasing the efficiency of tax
authorities and reducing regulatory pressure on
business.
5. Conclusions
The analysis of the level of economic
development of Poland and Ukraine has made it
possible to conclude that Poland has dominated
over Ukraine in terms of GDP by 4-5 times, despite
the fact that after the collapse of the Soviet Union,
Ukraine somewhat overrode Poland in this respect.
One of the reasons for such a rapid pace of
economic development in Poland is an effective
fiscal policy based on the concept of “functional
finances”, where the main emphasis is on capital
expenditures on economic infrastructure; this is the
basis of long-term economic growth, as well as
fiscal discipline, which allows ensuring a high level
of conversion of public debt into economic
development. In addition, fiscal policy of Poland is
characterized by an extensive system of tax
benefits, which are aimed at stimulating the
development of production with a high share of
value added. The result of the fiscal policy of
Poland was the achievement of a high share of
industrial products in exports, which significantly
reduces the dependence of the country’s economy
on raw material cycles.
From these standpoints, we believe that the
fiscal policy of Poland can be a good example for
the government of Ukraine, in particular, in terms
of establishing fiscal discipline, converting public
debt into economic development, establishing a
system of tax incentives aimed at stimulating
economic growth. In our viewpoint, the basic goal
of fiscal policy of economic development should be
stimulation of the development of the processing
industry with a high share of value added, reducing
current expenditures from the state budget and
increasing expenditures on economic infrastructure,
which is the basis of long-term economic growth.
Due to the limited statistical data or their
complete absence, it was not possible to assess the
effectiveness of the tax authorities of Poland and
Ukraine in the academic paper. Along with this, it
is not possible to assess the real effect on economic
development from tax benefits in both countries.
Therefore, promising areas of scientific research in
this area can be studies of the quality of fiscal
decisions, forasmuch as the effectiveness of any
policy (as the art of managing) depends on the
decisions made by people who are currently in
power. Furthermore, in order to get a complete
picture of the level of fiscal policy in Poland and
Ukraine, it is important to study the level of
efficiency of the tax authorities and take measures
to unshadow the national economy.
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Iaroslav Petrunenko, Ruslan Lavrov,
Vasyl Kuybida, Maksym Slatvinskyi,
Andrii Zelenskyi, Svitlana Oneshko
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Contribution of Individual Authors to the
Creation of a Scientific Article (Ghostwriting
Policy)
The authors equally contributed in the present
research, at all stages from the formulation of the
problem to the final findings and solution.
Sources of Funding for Research Presented in a
Scientific Article or Scientific Article Itself
No funding was received for conducting this study.
Conflicts of Interest
The authors have no conflicts of interest to declare
that are relevant to the content of this article.
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Creative Commons Attribution License 4.0
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DESIGN, CONSTRUCTION, MAINTENANCE
DOI: 10.37394/232022.2023.3.5
Iaroslav Petrunenko, Ruslan Lavrov,
Vasyl Kuybida, Maksym Slatvinskyi,
Andrii Zelenskyi, Svitlana Oneshko
E-ISSN: 2732-9984
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Volume 3, 2023