Baltic Journal of Economic Studies

Vol. 1, No. 2, 2015

Corresponding author:
1 Department of Finance, National Academy of Statistics, Accounting and Audit.
E-mail: chutka.oksana@mail.ru

NATURE AND CLASSIFICATION ASPECTS
OF LOCAL BUDGET REVENUES

Oksana VINNYTSKA1,
National Academy of Statistics, Accounting and Audit, Ukraine

Abstract. The purpose of the article is to determine the essential characteristics of local budgets and justify their
classification aspects. Methodology. In the course of writing used general scientific and special methods of knowl-
edge: dialectical and systemic-functional – to summarize the theoretical concepts of income of local budgets;
analysis and synthesis – to detail the subject of research and study its components; logic synthesis – to justify
approaches and proposals for the formulation of local budgets. Results. Proved that today there is no single view on
the interpretation of economic categories “revenues of local budgets.” A refined concept of “local budget revenues”
from the standpoint of material content, form, organizational structure and nature of local budgets. Local bud-
get revenues determined as part of the financial resources of society, which is accumulated by local authorities to
enforce their tasks and functions to implement current and future challenges of social infrastructure in the regions.
Proved that the revenues of local budgets are derived from their own, and assigned to the established order of state
taxes, fees and other mandatory payments. The main feature of their own revenues is the direct subordination of
local government. The main feature is the fixed income long-term nature of their attachment to the appropriate
budget. Value/originality. Proved that the presence in the economic literature of different classification criteria of
local budget on various grounds provides multi classification that reflects all the features of the formation, use and
functional differences revenues of local budgets. This approach provides the basis for improving the functioning of
the theoretical foundations of the budget process in Ukraine at the level of local authorities.

Key words: fiscal policy, government revenues, budget revenues, revenues of local budgets, tax revenues, types of
income, classification of incomes.

JEL Classification: E62, E64, E63

1. Introduction
Studies of the revenue of local budgets Ukraine is

of particular relevance, especially because it is local
governments characterize the level of economic
development, arid through the proper implementation of
the budgetary process ensure economic and social stability
and adequate standard of living.

Strengthening financial, budgetary systems in the context
of European integration processes require a rethinking of
social and economic nature and the place and role of the
budget in the economic system of the state, the theoretical
study of the formation of the revenue base and use of
proceeds budgets nature of the budget and its importance in
creating an effective system of intergovernmental relations
and territorial financial equalization. In view of this
exceptional urgency acquire theoretical, methodological
and applied research questions the role and importance of
the budget, its adaptation to the requirements of market
economic environment.

In conditions of deepening disparities in development of
different regions of Ukraine revenues are problems in the

circle of interests of research scientists, practitioners and
the public. So a priority in the financial science. The need
to address these problems causes relevance of the chosen
research topic.

2. Analysis of recent research and publications
Introduction of scientific publications made it possible to

estimate the theoretical and practical level of development
problems of formation of revenues of local budgets
Ukraine. An important contribution to research features
of formation of local budgets made by such scholars
as Bondaruk T.G., A.P. Kirilenko, Yury S. and others.
Most sources, special attention is paid to the theoretical
aspects of the nature and structure of local revenues and
underestimated the role of fiscal adjustment.

This study aims to determine the essential characteristics
of local budgets and justify their classification aspects.

In the course of writing used general scientific and
special methods of knowledge: dialectical and systemic-
functional – to summarize the theoretical concepts of
income of local budgets; analysis and synthesis – to detail

Baltic Journal of Economic Studies

Vol. 1, No. 2, 2015
the subject of research and study its components; logic
synthesis – to justify approaches and proposals for the
formulation of local budgets.

3. The main material. Research essence revenue
Exploring the nature of budget revenues, to distinguish

between the definition of “public revenue” and “budget
revenue”, which are components of conceptual apparatus
of financial science. Revenues – an economic (financial)
category, objective phenomenon, and budget revenues –
financial concepts are associated with the activities of the
state, subjective actions of people. Revenues – broader
definition than budget revenues (Fedosov, Yurii, 2012).
They include both budget revenues and net income of state
enterprises.

Revenues cover the part of financial relations, which is
associated with the formation of financial resources at the
disposal of the state and state enterprises. This accumulated
financial resources of the state belong to the central
(concentrated in the state budget funds and purpose),
and those that remain at the disposal of state-owned
enterprises is decentralized (Venger, 2009; Romanenko,
Ogorodnyk, 2003).

Overall, budget revenues are treated as a collection of
local revenues on the irrevocable basis, charged under the
laws of Ukraine.

Thus, the concept of budget revenues is a narrower
concept of public revenues. It should also be borne in mind
that some of the financial resources available to the state
comes out of the budget, with other financial institutions,
such as public credit, public insurance, etc. (Tripak, 2011).
Thus, budget revenues are defined as revenues for the
main national fund required for the smooth development
of all sectors to improve welfare and cultural level of the
people, defense, maintenance of public bodies and local
authorities.

Exploring the notion of retrospective incomes of local
budgets, we note that to the 19th century, term revenues
of local budgets has not been used and the revenue of
local government with central government revenues were
interpreted as state or public.

In his fundamental work “The Wealth of Nations. The
study of the nature and cause of the welfare of nations
“(1776) Adam Smith first expressed feasibility of
delimitation of state and local budgets and, therefore, their
income (A. Smith, 1776). He stressed that in addition
to public financial management, there is also the local
financial sector, highlighting the types of income such as
non-tax (income from capital, enterprises, state assets)
and taxes.

In Soviet times the revenues of budgets categories
examined by such scientists as N.Rovenskyi and
D. Butakov. The scientist N. Rovenskyi in 1944
(Lehkostup, 2010;Rovenskyi, 1944) indicates the proper
use of revenues, income and grouping on the basis of
the recovery, it distinguishes between tax revenues and
revenues arising economic activities of local authorities.

The category of revenues of local budgets and consider
as a set of economic relations that contribute to the
territorial distribution of gross domestic product (GDP)
of the state and ensure the development of financial base
of local authorities (Lehkostup, 2010).

The biggest question of the nature and formation of local
budgets in the financial science is acquired at the time of
independence of Ukraine. Development of conceptual
bases of local budgets in this time closely associated with
the recognition of local government and the expansion of
financial independence of heal authorities. However, many
researchers do not distinguish the concept of focal budgets,
giving the definition of budget revenues as a whole, both at
national and local levels.

Under budget revenues authors of “Budget system of
Ukraine” S.l. Yurii and J. M. Beskyd (Yurii, Beskyd, 2000)
to understand the state of centralized resources that are
necessary for the performance of the functions, the main
activities of the state, due to the goals and objectives
that characterize its essence. Such revenues express the
economic relations arising in the process of formation
of funds of funds and at the disposal of the government
and management (S.V.Savchuk, 2012). In this definition
reveals valuable, distribution character concept, but not
set specific local budget revenues.

V.V. Asauf, A.V .Dementiev budget revenues interpreted
as funds received under the legislation available to the
appropriate level of government (Asaul, Dementiev,
2010). Budget revenues are divided into tax and non-tax
sources and gratuitous transfer. In the current year budget
revenue is credited as the balance that formed at the end of
the previous year.

O.R . Romanenko in the manual “Finance” (Romanenko,
2004) revealed the economic nature of this concept. The
national budget revenues scientist calls the economic
relations arising from state entities and individuals in the
formation of the country’s budget.

However, scholars such as V.D. Bazylevych,
O.D. Vasylyk, O.P. Kyrylenko, U.V. Pasichnyk,
V.V. Pysmennyi, S.I. Yurii delimiting the notion of state
and local budgets.

V. Literate (Literate, 2012) defines the revenues of focal
budgets as part of the financial resources of local authorities
with which to create a financial base to meet socîal needs.
Manifestations of relations arising in the process of lotai
budget revenues are the revenues of various kinds, and the
material and the material embodiment – cash funds raised
in the capital budget and used for the intended purpose.

Professor U.V. Pasichnyk (Pasichnyk, 2008) focuses
on identifying the economic substance of revenues,
considered as a separate economic category expressing the
scope of economic relations of society, which is associated
with the formation, distribution and use financial resources
of regional and local governments used to provide current
and future challenges of the region.

Professor O.P. Kyrylenko considers local budget
revenues as revenues, consisting of equity and fixed

Baltic Journal of Economic Studies

Vol. 1, No. 2, 2015
income, which is defined for the long term, which should
create the necessary conditions for the implementation
of strategic planning (Kyrylenko, 2004). The scientist
stressed that own revenue receipts not included in the
calculation of intergovernmental transfers to local budgets.
As a result, this procedure provides a direct interest of local
governments in increasing the revenue side.

Professor S„ George shared revenues of local budgets are
fixed and control (Yurii, 2003). From the standpoint of the
scientist, considered as fixed income, which by law is fully
reserved for certain budget and not be transferred to lower-
level budgets or partially fixed budgets higher level and to a
certain extent be transferred to the budgets of lower level.
However, the budget revenues is based not only on the
fixed revenue sources. A separate administrative-territorial
units assigned revenue sources may not suffice to cover the
costs of the program of economic and social development.
In such cases the regulatory returns. The above income
characterized in that transmitted in the form of deductions
from state taxes and fees from the budget to the budgets of
higher level to lower level of rebalancing.

V.D. Bazylevych stresses that local budget revenues are
derived from its own sources and assigned national taxes,
fees and other mandatory payments (Bazylevych, 2002).

K.M. Vladimirov, N.H. Chuiko and O.F. Rogalskyi
(Vladimirov, Chuiko, Rogalskyi, 2007) noted only that
the revenues of local budgets is the financial basis of
local government and the state is actively involved in the
formation of revenues of local budgets, financially support
it. They, like most authors, immediately begin to disclose
the composition of local budgets and sources of their
formation, not focusing on the concept.

O.D. Vasylyk and K.V. Pavliuk (Vasylyk, Pavliuk,
2004) believe that the economic substance of local
budgets manifested in the formation of funds which are
financial support of local councils and local government
administration, and use these funds to finance the
maintenance and development of social infrastructure,
local economy and more.

Thus, the study of scientific papers on the problems of
formation of local budgets give reason to formulate their
own definition of “local budget revenues” – a combination
of monetary and economic relations of society to ensure
the formation, distribution of financial resources at the
regional level and optimal, efficient regional development
with decentralized management in the face of local
authorities.

That is, the incomes of local budgets – are financial
resources of local authorities, which are used for the
development of a particular region and which should meet
the scope of authority established by law.

4. Classification aspects revenues
and expenditures of local budgets

The study of literature (Bondaruk, 2013) suggests
that aspects of the issue of classification of revenues and
expenditures of local budgets is quite controversial, because

each of scholars considers and distinguishes between types
of classifications of income and expenditure from different
perspectives. In that reason, there is no one universal
classification of revenues and expenditures of the local budget.

Classification Analysis of local budgets in the current
conditions is of particular relevance. The scientific
literature presents various criteria for the classification of
local budgets, indicating that the multifaceted problems
of coverage sources of local revenues and functional areas

Table
Multi classification of local budget revenues

The criteria for
classification

Items of income

According
to the Budget Code

– Own;
– Mounted.

By section according
to budget classification

– Tax revenues (taxes, fees and
charges);
– Non-tax revenues (revenues from
property and business activity, revenues
from fines, etc.)
– Revenues from capital transactions
(cash flow from the sale of ownerless
property, property that the law passed
heir to the state, and treasures)
– Official transfers (subventions,
grants, subsidies)

For localization
– Territorial income received in the
territory of local government
– Income derived in other areas

For socio-economic
content

– revenues from public entities,
municipal, private, collective
ownership;
– funds received from the public

Under the terms of
repayment

– Inverse income – placing local loans
– Irreversible revenues – payments
and payments of businesses and
individuals

The level of
centralization

– Decentralized – revenue used at the
place of education
– Centralized – revenues that are
concentrated in the state budget and
other target funds centralized cash

By means of attracting

– Taxes
– Fees
– Mandatory Payments
– Other revenues

By the method of
mobilization

– Mandatory
– Voluntary

The frequency of
occurrence

– Ordinary – regularly included in
income
– Emergency – included in income on
exceptional but justified circumstances

According to sources
of formation and use of
the form

– Income from property
– Revenues of local budgets, which are
a source of revenue, cost
– The sale of land
– Different types of payments

By way of enrollment
– Income of the general fund
– Special Fund revenues

Baltic Journal of Economic Studies

Vol. 1, No. 2, 2015
of use. Multi classification of local budget revenues in the
table.

According to the code of budget classification, budget
revenues are distributed in the following sections:
tax revenues, non-tax revenues, revenues from capital
transactions and transfers. Depending on the location
of the territorial local revenues advisable to separate:
income received in the territory of local government, and
the income derived in other areas, which are directed at a
particular local budget.

In the classification of income socioeconomic taken
into account the existence of different forms of ownership.
The most commonly used classification division revenues
for tax and non-tax. Also, budget revenues can be both
mandatory and voluntary revenue.

Based on the sources of division formation, laid criterion,
thereby be obtained revenues: income, personal income,
other budgets funds and others.

Some authors share income on ordinary and
extraordinary (Momot, 2012). Also, revenues are allocated
general and special funds of the local budget.

That is, there are different criteria for the classification
of local budgets. The following multicriterial classification
of local budget is characterized by complexity, logic and
allows for more in-depth and comprehensive analysis of
the composition and sources of income of local budgets.

5. Conclusions
In the context of the above study the nature and

classification aspects of local budgets Ukraine makes it
possible to reach such conclusions.

Today there is no single view on the interpretation of
economic categories “revenues of local budgets.” A refined
concept of “local budget revenues” from the standpoint of
material content, form, organizational structure and nature
of local budgets. Local budget revenues determined as part
of the financial resources of society, which is accumulated
by local authorities to enforce their tasks and functions
to implement current and future challenges of social
infrastructure in the regions.

It is proved that the revenues of local budgets are derived
from their own, and assigned to the established order of state
taxes, fees and other mandatory payments. The main feature
of their own revenues is the direct subordination of local
government. The main feature is the fixed income of long-
term nature of their attachment to the appropriate budget.

The presence in the economic literature of different
classification criteria of local budget on various grounds
provides multi classification that reflects all the features of
the formation, use and functional differences revenues of
local budgets. This approach provides the basis for improving
the functioning of the theoretical foundations of the budget
process in Ukraine at the level of local authorities.

References
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Bazylevych V. & Balastryk L. (2002), Public finances : teach. Manual. Society. – Atika. – 368 p.
Bondaruk T.G. (2013) Economic and statistical analysis of formation of local budgets. Statistics, № 4, p. 7-15.
Fedosova B. & Yuriia S. (2012) The budget system: Textbook under sciences. Ed. Publication. – K. Ternopil:
TSUL-economic thought. – 871 p.
Kirilenko A. (2004). Local Finance: Textbook. – Ternopol: Acton. – 140 p.
Legkostup I. (2010). Features of local budgets Ukraine and ways to strengthen their revenue base. Formation of
market relations in Ukraine, № 3, p. 165-170.
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№ 8, p. 125-126.
Pasichnyk Y.V. (2008) Budget system of Ukraine. Textbook. 2nd ed., Revised. and add. – K. Knowledge. – 670 p.
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resource]. – Retrieved from: http://www.kbuapa.kharkov.ua/e-book/tpdu/13
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Vasiliko O. & Pavlyuk K. (2004). The budget system of Ukraine: the textbook. – K.: Centre teach. years. – 544 p.
Venher V.V. (2009) Finance: teach. Ref. for students. HI. teach, bookmark. – KCenter of educational literature. – 432 p.
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Yurii S. & Beskyd J. (2000). The budget system of Ukraine: Training, guidances, for the studio. Econ. spec. HI.
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Baltic Journal of Economic Studies

Vol. 1, No. 2, 2015

Оксана ВИННИЦКАЯ
СУЩНОСТЬ И КЛАССИФИКАЦИОННЫЕ АСПЕКТЫ ДОХОДОВ МЕСТНЫХ БЮДЖЕТОВ
Аннотация. Целью статьи является определение сущностных характеристик доходов местных бюджетов
и обоснование их классификационных аспектов. Методы исследования. В ходе написания статьи использо-
ваны общенаучные и специальные методы исследования: диалектический и системно-функциональный – для
обобщения теоретических концепций формирования доходов местных бюджетов; анализа и синтеза – для
детализации предмета исследования и изучения его составляющих; логического обобщения – для обосно-
вания подходов и предложений относительно формулировки доходов местных бюджетов. Результаты.
Обосновано, что на сегодняшний день не существует единого мнения о трактовке экономической категории
«доходы местных бюджетов». Предложено толкование понятия «доходы местных бюджетов» с позиций мате-
риального содержания, формы, организационной структуры и характера местных бюджетов. Доходы мест-
ных бюджетов определены как часть финансовых ресурсов общества, которые аккумулируются местными
органами власти для обеспечения выполнения возложенных на них задач и функций с целью реализации
текущих и перспективных задач развития социальной инфраструктуры регионов. Обосновано, что доходы
местных бюджетов формируются за счет собственных и закрепленных в установленном порядке общегосу-
дарственных налогов, сборов и других обязательных платежей. Главным признаком собственных доходов
является непосредственная их подчиненность местному самоуправлению. Главный признак закрепленных
доходов заключается в долгосрочном характере их закрепление за соответствующим бюджетом. Значение.
Обосновано, что наличие в экономической литературе разных критериев классификации доходов местных
бюджетов по различным признакам обеспечивает многокритериальную их классификацию, отражает все
особенности формирования, использования и функциональные различия доходов местных бюджетов. Такой
подход создает базу для совершенствования теоретических основ функционирования бюджетного процесса
в Украине на уровне местных органов власти.