State Budget Revenues in Ensuring the Stability of Public Finances

Abstract

The sustainability of public finance in times of endogenous and exogenous shocks results from the ability of public authorities and local self-government bodies to adapt to the changes caused by their impact, and to accumulate sufficient budgetary resources for further expenditure according to the budget schedule, including debt servicing and repayment, without excessive debt accumulation and increased insolvency risks. An important role in this process is played by the combination of tax, transfer (grant), and debt instruments for the formation of budgetary resources. The purpose of the article is to show the dynamics and structure of the State Budget revenues in Ukraine as a tool ensuring the sustainability of public finances, based on assessment of the elasticity of budget revenues and major revenue-forming taxes to GDP, and the correlation between budget revenues and economic dynamics. The analysis covers the period 2021-2026. The econometric approach (log-linear econometric models) was used to assess the sensitivity of cumulative budget income, value-added tax, corporate income tax, and personal income tax to changes in GDP. A significant differentiation of tax responsiveness was revealed, reflecting the different role of taxes in shaping the revenue base and in the functioning of automatic fiscal stabilizers. The results demonstrate the elastic nature of state budget revenues and the structural differentiation of tax responsiveness, which is important in forecasting budget revenues and shaping fiscal policy in the conditions of macroeconomic instability. The results demonstrate the State Budget revenues are a critical factor for the resilience of public finance, and their elasticity assessment is an important tool in enhancing the efficiency of fiscal policy and budget forecasting in times of macroeconomic instability.