Sustainable Development of Basic Territorial Self-sufficient Entities of Ukraine and Poland

* доктор економічних наук, професор, професор кафедри екології

** доктор економічних наук, старший науковий співробітник, завідувач кафедри міжнародних

Ключові слова:базові територіальні утворення, екологічний податок, бюджети,

територіальний розвиток, економічна орієнтація локальної економіки, природокористування, проектування сталого розвитку.

Introduction to basic territorial self-sufficient entities' issue

Basic territorial selfsufficient entities (BTSSEs) are the main local territorial units of the administrative system, in Ukraine it is the united territorial communities (UTC), in Poland it is the powiats and gminas.

We are identifying basic territorial entities for three main reasons:

1) Managerial needs,

2) Effective economic and social development;

3) Efficient use of territory resources.

Let's consider these reasons more detailed. From the theoretical perspective, we should underline that the essence of mentioned territorial allocation is related to the search for the most effective mechanisms of territorial governance. We define BSTEE as the basic local territorial administrative unit which has functions of self-government and financial selfsufficiency, which can implement these functions to achieve sustainable territorial development. BSTEE allocation is motivated by two factors.

First of all, the aim of forming BSTEE is identifying the specific of these entities, their functions, and the possibility to implement effective local policies on a sustainable development basis. Localization of sustainable development policy is a general practice in EU member states; the communities of the Netherlands, Germany, Sweden, and Poland have an interesting and useful experience. The specificity of the whole system of local selfgovernment in Poland is based on the principle of supplementation rather than absorption. That means that each successive level of self-government performs only those functions that are not capable of performing lower ones. They are also based on clear and understandable criteria for the allocation of territories, functions, and responsibilities [2].

Secondly, the aim of forming BSTEE is emphasizing on the most effective and strategically expedient directions of implementation of sustainable development policy at the local level and, therefore, to submit proposals on improvement of governance, the attraction of resources, solving of urgent socio-economic and environmental problems. Among such problems in Ukraine are: identification and implementation of areas of effective economic development of the territory, overcoming social problems, in particular, aging of population, access to education (including preschool and professional), environmental problems, e.g. waste management, rational management of natural resources, creation recreational and recreational sites, especially near water bodies, pollution of farmland and groundwater [3, 6].

Problems and approaches. Budget, finance and taxation

The accumulation of funds for BTSEE (practically, at the level of UTC) in Ukraine is carried out through taxation of economic activity, land usage, and targeted transfers.

During 2018, the local budgets of UTC have spent UAH 570.6 billion (about EUR 19.3 billion). The main categories of expenses were: secondary schools (16.3 % of all local budget expenditures), housing subsidies (11.6 %), health and hospitals (7.6 %), assistance to low-income families (7.4 %), repair and construction of roads (5.8 % ), kindergartens (5.6 %), housing and communal services (5.3 %) and maintenance of local authorities and local selfgovernment (4.8 %) [8].

The revenues of local budgets are formed by:

* tax revenues (providing over 88 % of the total amount of own local budget revenues) and includes part of the national taxes and fees (personal income tax, income tax, rent (for mineral resources, mining, etc.); excise tax on fuel, etc.), local taxes and fees (property tax, single tax, tourist tax, etc.);

• non-tax revenues (just over 10 % of the total amount of own revenues of local budgets) includes fees for licensing and permits, rent, state duties, fines;

• other revenues include fixed capital, trust funds, donations from the EU and international organizations, etc.

In Poland, the situation is similar.

Gminas' own revenues are derived from local tax revenues; local taxes, property taxes, agricultural tax, transportation tax, personal income tax under the simplified taxation system, inheritance and gift tax, civil law tax. In practice, gminas have tax preferences, such as tax exemptions, tax benefits, tax deferrals, or tax arrears [1, 9, 10].

Thus, the Polish commune's self-sufficiency is now higher than the Ukrainian one. That is why we are talking about BTSEE in Ukraine and Poland, where self-sufficiency is the optimal form of the functioning of administrative formation on the principles of sustainable development and financial capacity.

One more particular problem in Ukraine is environmental taxation, accumulation, and distribution. Although local budgets have increased revenues in recent years, the maximum was observed in 2016 (UAH 3.3 billion). Furthermore, the situation worsened due to complications in the administration of the environmental tax and the redistribution of funds between central and local authorities. According to the Budget Code and the Law of Ukraine “About the State Budget of Ukraine”, it is distributed between the state and local budgets in the following proportion [7] :

1) State budget:

a) General fund: 45 % environmental tax (except for the radioactive waste tax); 50 % environmental tax on radioactive waste;

b) special fund: 50 % of an environmental tax on radioactive waste.

2) Local budgets (special fund): 55 % of the budgets of Kyiv and Sevastopol; 30 % - regional budgets and budgets of the Autonomous Republic of Crimea; 25 % - rural, settlement, city budgets, UTC budgets.

Achieving of synergistic effect by the implementation of environmental policy at the local level is possible under the conditions of such dynamics of the receipt of the environmental tax in the budget, which will coincide with the corresponding dynamics in the expenditures for environmental measures.

Currently, local budgets in Ukraine are increasing environmental tax revenue, see table 1.

Table 1 Dynamics of rate changes in environmental tax and population on the level of local entities [authors systematization of State Treasury of Ukraine]

However, the effectiveness of these funds remains low.

Does the question arise how to evaluate and systematize these environmental measures, prioritize them if the UTCs do not have the appropriate specialists within the administrative unit, and have no positive experience in involving third-party experts to accomplish such tasks (except for a few international aid projects through grant support)? How can environmental issues be addressed in the single process of planning and strategic planning for the sustainable development of the territory, so that solving the urgent environmental issues does not prevent it from effectively addressing the challenges of economic growth and social responsibility? We propose mechanisms for the development of BTSEE, which do not require additional external financing but are based on local activity and institutional capacity.

Currently, the mechanism of accumulating funds for BTSEE in Ukraine needs improvement. It could include:

1) simplification of tax administration;

2) permission for its accumulation, storage in banking institutions, pooling of environmental tax funds with other communities to form joint financial associations;

3) clarification of articles for which it is possible to spend environmental tax funds, including in these articles the directions of expenditures aimed at the integrated design of sustainable development of territories.

We are sure that this mechanism in Ukraine need improvement and concentrated further on how it can be achieved. We have investigated that the financing of environmental activities in the UTC is increasing at its own expense, and simultaneously the effectiveness of environmental policy is decreasing. In the nutshell, the reason for this is the inability to accumulate costs and the complexity of their targeted use (application of tender procedures, lack of plans and programs at the local level, focusing on social or infrastructural issues).

On the way to sustainable development, we have to streamline waste management, ensure effective local government and self-government initiatives, and address public utilities and infrastructure.

Green-startups and their role in BTSEE development

One of the possible solutions for increasing the effectiveness of local sustainable development policy (BTSEE) is to stimulate and implement green start-ups and projects to meet the challenges of economic development and the sustainable use of natural resources.

The Ukraine 2020 Sustainable Development Strategy - the framework document for the development of sustainable development initiatives - was developed in particular on the basis of the Association Agreement between Ukraine, on the one hand, and the European Union, the European Atomic Energy Community, and their Member States. The analysis of the main issues mentioned in this document, as well as the analysis of the experience of decentralization processes in the country allowed to identify priority directions for the development of BTSEE at the level of community and business (Fig. 1).

Moreover, when developing the concept, we tried to make it universal, design it as the framework for different territories and communities, with the possibility of further adaptation to the requirements and specifics of precise BTSEE. It also means that the model can be used not only for Ukraine.

In the framework of the analysis of the experience of decentralization in Ukraine, data of the Organization for Economic Cooperation and Development on the development of the Wojewodztwa malopolskiego, we identified possible directions for improving the effectiveness of local sustainable development policy (BTSEE):

Figure 1. The concept of interaction between business and communities on the basis of sustainable development [built by the authors on the basis of Danko Y. [4]]

- Organization of communication with local entrepreneurs and collaboration with large companies operating in the territory based on the use of a cluster approach (or creating a cluster as a geographical concentration of similar, related or additional enterprises with active channels for business transactions, communications and dialogue sharing specialized infrastructure, labor markets and services, and share opportunities or threats);

- Stimulation of participation in various events (programs, fairs, meetings) for the development of territories of common interest, initiated by the association, by the state, the EU, etc. Such communications at high-level meetings are needed to agree on goals and goals for business development, identify key actors to support the goals set, share experience and experience;

- Inspiration civic activism, education and outreach activities, fostering a culture of sustainability and society's demand for transparency, a clean environment, and social responsibility. Also, close cooperation in the form of dialogue with residents and entrepreneurs and managers of territorial associations will adequately assess the current skills needs for the development of small and medium-sized businesses, as well as cooperation with large (regional or national) employers and the Universities and will give impetus to the development of institutions. professional education;

- Stimulating the development of start-ups, including training, the creation of incubators, etc. It is important for Poland and Ukraine to increase their English language skills for free access to best practices and opportunities for equal participation in international experience and discussion.

Undoubtedly, the issue of the most effective financial support for regional (communities) development remains open to both Poland and Ukraine, as discussed in numerous documents and studies on territorial development, especially in the area of regional support that is not currently attractive for investment.

A detailed analysis of sustainable development opportunities at the level of local communities brings to the fore the issues of education and raising awareness. In this context, the use of startup culture (especially green startups, such as energy, mobility, clientele, cybersecurity or Smart City) can help both entrepreneurship and investment, as well as promoting the principles of sustainable development and popularization of BTSEE and raising awareness of investors and stakeholder about the territory. Taking into consideration all mentioned above, this will create a favorable climate in the community and encourage residents to stay and take advantage of local opportunities rather than seek a better life elsewhere.

The development of startup-industry is a global trend, according to Paymentsens (Interactive Map, 2019) study of European startup industry tends to grow steadily from 2013 to 2017, with the UK, France, Spain, Italy, Germany, and Poland leading the way. According to another study, startups were able to create 781,000 jobs, attract € 4.9 billion in investments and generate revenue of € 62 billion. Here should be noted that many successful startups are then bought out by big business and they stop their existence as a startup not as a result of bankruptcy but as a result of successful development.

It should be noted that in Ukraine there is also the culture of startups that are based on valid or eco-friendly ideas are quickly developing, and including elements of educational activity, and built on the cost-effective use of resources, the processing or the search for new, safer and more sustainable ways of economic development. Therefore, participating in numerous startup competitions as an opportunity to learn and receive financial support can now be the first step in sustainable territorial development.

Conclusions

Summarizing, let's say that in an optimistic scenario, the development of startup culture can initiate and develop such things are:

- raise the standards of living in the community and increase the level of employment,

- create a platform for dialogue and involvement of the population in discussing problems (forming a public inquiry) and finding solutions,

- attracting investment in BTSEE and creating new businesses, - creation of a positive image of the territory in the country on the international market, which can give impetus for economic development.

BTSEE could be interpreted as the basis of local self-government and the designing of an effective system of financial capacity at different levels, since the national economy is formed also at the basic territorial level.

Therefore, forming an effective model for the development of BTSEE required taking into account the specifics of interactions of the local economy and urgent national (regional) economic processes. Undoubtedly, one of the urgent processes is the choice of specialization, the other - the design a territorial brand based on the use of territorial advantages and resources. Resources are an integral value and a unique component that combines natural, human, infrastructural and more.

The use of natural resources has certain limitations and ambiguous advantages in long term and partially in medium term period. Hence, according to studies on the dynamics of arable land use and crop structure, the increase in land use in the direction of least value added is associated with high returns, but only in the short term. In particular, sunflower and rapeseed crops have increased by 5 % over the last 4 years. However, the profitability of such activities has a declining trend. According to the researches of G. Studinska, it is there that creates the least added value. If we evaluate the rating of Ukraine by the level of brands, we can say that the absence of brands or the isolation of brands in the domestic market could be interpreted as a sign of low level of economic development. Traditionally, branding is the result of commercial initiatives and public concern (such as stimulation, encouragement, education). Brands should be a source of economic activity and capitalization. Therefore, it is advisable to clarify and actively promote brands in both domestic and foreign markets.

The development of BTSEE foresees an increase in the effectiveness and efficiency of environmental policy, especially in areas sensitive to the state of environment. The determining the economic levers to increase the level of greening the economy become more and more relevant at the local level. In particular, by encouraging expert research to institutionalize initiatives and create the preconditions for a positive stakeholder image.

The big role in the development of BTSEE is to determine the perspective signposts for economic development as a sphere of efforts in the framework of designing, programming and policy making. This allows the industry that forms the economic “profile” of BTSEE to become the basis. That is, one that has prospects for development for 10-15 years. Hence, the tourism could be interpreted as an industry which characterized by high return on capital, rapid turnover of capital, but more or less continuous profitability require several years of operating, while agricultural enterprises will make a profit for the next year. Consequently, the combination of short-term areas of profitability and strategic prospects is the clue to sustainable development of BTSEE.

References

1. Badera, Jaroslaw, Pazderski, Leszek (2017). Effects of lignite surface mining on local communities: controversies and areas of negotiation. Sciendo - Environmental & Socio-economic Studies, 5(3), 31-39.

2. Bairak, S. (2013). Mistseve samovriaduvannia Respubliky Polshcha: osoblyvosti stanovlennia ta zasady funktsionuvannia. Studia politologica Ucraino-Polona, 3, 255-262. Retrieved from http://nbuv.gov.ua/UJRN/Spup_2013_3_30.

3. Chumbula, Jimson Joseph, Massawe, Fatihiya Ally (2018). The role of local institutions in the creation of an enabling environment for water project sustainability in Iringa District, Tanzania. Sciendo Environmental & Socio-economic Studies, 6(4), 1-10.

4. Danko, Y. (2017). Competitive principles of sustainable rural development. Regional Economics, 3, 70-76.

5. Interactive Map (2019). Europe's Most Popular Startups. Retrieved from https://www.paymentsense .com

6. Kocon, Pawel (2015). Selected social phenomena following the extraction of mineral resources. Sciendo Environmental & Socio-economic Studies, 2(4), 47-51.

7. Letter of the State Tax Service of Ukraine dated 16.01.2019 № 1422/7 / 99-99-12-03-04-17 “On the administration of the environmental tax”. Retrieved from http://sfs.gov.ua/zakonodavstvo/podatkove- zakonodavstvo/listi-dps/print-73141 .html.

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9. Szymanska, Wioletta, Michalski, Tomasz (2019). Population changes in former voivodeship cities in Poland in the context of suburbanization processes and loss of the administrative function. Sciendo Environmental & Socio-economic Studies, 7(3), 66-78.

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Література

1. Badera, J. Effects of lignite surface mining on local communities: controversies and areas of negotiation / J. Badera, L. Pazderski // Sciendo - Environmental & Socio-economic Studies. - 2017.

- № 5(3). - Р. 31-39.

2. Bairak, S. Mistseve samovriaduvannia Respubliky Polshcha: osoblyvosti stanovlennia ta zasady funktsionuvannia [Electronic resource] / S. Bairak // Studia politologica Ucraino-Polona. - 2013. - № 3. - Р. 255-262. - Accessed mode : http://nbuv.gov.ua/UJRN/Spup_2013_3_30.

3. Chumbula, J. et al. The role of local institutions in the creation of an enabling environment for water project sustainability in Iringa District, Tanzania / J. J. Chumbula et al. // Sciendo Environmental & Socio-economic Studies. - 2018. - № 6(4). - Р. 1-10.

4. Danko, Y. Competitive principles of sustainable rural development / Y. Danko // Regional Economics. - 2017. - № 3. - Р. 70-76.

5. Interactive Map [Electronic resource]. Europe's Most Popular Startups. - 2019. - Accessed mode : https://www.paymentsense .com

6. Kocon, P. Selected social phenomena following the extraction of mineral resources / P. Kocon // Sciendo Environmental & Socio-economic Studies. - 2015. - № 2(4). - Р. 47-51.

7. Letter of the State Tax Service of Ukraine dated 16.01.2019 № 1422/7 / 99-99-12-03-04-17 “On the

administration of the environmental tax” [Electronic resource].- Accessed mode :

http://sfs.gov.ua/zakonodavstvo/podatkove-zakonodavstvo/listi-dps/print-73141.html.

8. Local Budget [Electronic resource]. Revenues and Expenditures: Briefly on the Main - Cost of State.2019. - Accessed mode : http://cost.ua/news/687-revenues-and-expenditures-of-local-budgets.

9. Szymanska, W. Population changes in former voivodeship cities in Poland in the context of suburbanization processes and loss of the administrative function / W. Szymanska, T. Michalski // Sciendo Environmental & Socio-economic Studies. - 2019. - № 7(3). - Р. 66-78.

10. Ovsiak, K. Mistsevi podatky yak dzherelo dokhodiv mistsevykh biudzhetiv Polshchi v umovakh finansovoi kryzy // Ekonomichnyi analiz. - 2012. - № 10(2). - Р. 312-315.

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