There still exist at least two significant barriers to fiscal decentralization and increasing the local politicians responsibility, namely the current individual income tax and real estate tax payment procedure. The fiscal decentralization undertakings should be completed in the 1-st quarter of 2015, and actually the coalition participants might be approaching the finish line. However, locally there still are opportunities to shift the responsibility to the local governments,  because the undertakings on individual income tax payment procedure are still outstanding and the real estate tax is not reformed according to the European standards.

Individual income tax,  the key source of revenues for the local budgets, is still paid at the commercial entity registration place. Real estate tax is based on minimal wages rather that the estimated real estate price, notwithstanding that the latter may vary by dozens of times depending on how big the city is. The omission or partial fulfilment of the coalition members undertakings made the Open Society Foundation to initiate Open call to the political forces on the need to fulfil all individual income tax and real estate tax undertakings, as well as establish fixed terms for processing all payment orders of the local budgets and set forth responsibilities of the State Treasury officials.  The Reanimation Package of Reforms group on decentralization supported this appeal.

The Open Society Foundation Director, RPR expert Ivan Sikora, considers that the local budgets revenues might boost by UAH 100-200 billion by fulfilling the undertakings on individual income tax payment exclusively at the place of the taxpayer employees work, reforming the real estate tax according to the European practices (estimated price of objects), increasing the responsibility and requirements to the local politicians, ongoing participation of citizens in the local councils’ activities, increasing their influence on budgeting processes along with budget use control, approval and observation of municipal development documents, branch reforms and unavoidable penalties for corruption. Chief expert of RPR decentralization group Yuriy Hanushchak points out that the politicians must fulfil their undertakings on administrative and territorial decentralization.

 Ivan Sikora informs on the outcomes of meeting with the representatives of the anti-corruption group “Returning Billions to Local Budgets” held from March 10 to 18 in 6 cities of the Eastern and Southern Ukraine (Kharkiv, Dnipropetrovsk, Zaporizhya, Kherson, Mykolayiv and Odesa). In his opinion, there is high demand for knowledge and skills on strengthening the community influence on the local politicians during and upon elections, which is largely realized through the opportunities to participate in the budgeting process. The experience of Kyiv group of the RPR and the Open Society Foundation raised not only interest, but the need to provide tailor-made expertise for each of the hosting cities.