Assessing the Impact of Tax Reforms on the Long-Term Sustainability of Public Finances

  • O. S. Bilousovа State Organization “Institute for Economics and Forecasting of NAS of Ukraine”
Keywords: tax reform, tax policy, sustainability of public finances, tax structure, tax evasion, tax revenues, economic behavior, investment in fixed capital, innovation


The article is devoted to the methodological aspects of assessing the impact of tax reforms on the sustainability of public finances. The low impact of numerous tax changes during 2003–2017 in Ukraine aimed at reducing the tax burden, improving the investment climate, led to a narrowing of fiscal space, a decrease in government investment, and a curtailment of enterprise investment. The problem of assessing the direct and indirect effects of tax reforms in terms of changes in tax rates and tax base, tax revenue structure, tax benefits, on public finances and the finances of economic entities in the short and long term remains insufficiently investigated. The task is to identify the relationship between tax policy changes that are taking place within the framework of tax reforms, the economic behavior of economic entities, and their impact on the sustainability of public finances.

The article identifies trends in the development of taxation in the EU, which create the conditions for activation of the factors of development of innovative, competitive economy, in particular, the reduction of corporate income tax rates and personal income tax while expanding the tax base, increasing consumption taxes on property. The methodological support of the assessment of tax reforms of EU countries is summarized and the conclusion is made about the possibility of its application in Ukraine. Changes in the share of various taxes in the total amount of tax revenues are analyzed. The reasons and the financial consequences of the tax effects in Ukraine established in the EU countries were found to be associated with a reduction in corporate income tax rates and a compulsory social contribution (lower rates do not reduce tax revenues and increase the budgetary income in the medium term). Indicators and models that can be used to assess tax reforms aimed at improving tax competitiveness (reducing tax rates), as well as reforms to ensure economic growth (redistribution of tax burden and tax incentives - tax innovation benefits) are identified. It is proposed to supplement this list with indicators: the level of investment of the institutional sectors of the economy, the investment rate, the level of profitability, the global innovation index.

Proposals on adjusting the directions of tax development in Ukraine have been elaborated.


Download data is not yet available.


Tax policy in the European Union – Priorities for the years ahead. Tax Policy Strategy. (2001). Retrieved from

Xing, J. (2011). Does tax structure affect economic growth? Empirical evidence from OECD countries. Working Paper. Oxford University Centre for Business Taxation. WP11/20. Retrieved from

Gaspar, V., Jaramillo, L., & Wingender, P. (2016). Tax Capacity and Growth: Is there a Tipping Point? IMF Working Paper. Fiscal Affairs Department. WP/16/234. Retrieved from

Tax Policy Reforms 2019. OECD and Selected Partner Economies. (2019). Retrieved from

Johansson, А., Heady, C., Arnold, J., Brysand, B., & Vartia, L. (2008). Tax and Economic Growth. Economics department Working Paper, № 620. ECO/WKP(2008)28. Retrieved from

Brys, B., Matthews, S., & Owens, J. (2011). Tax Reform Trends in OECD Countries. OECD Taxation Working Papers, № 1. Paris: OECD Publishing. Retrieved from

Statutory tax rates. Data on taxation. Main national accounts tax aggregates. Retrieved from

Podatkovyi kodeks Ukrainy vid 02.12.2010 № 2755-VI (Tax Code of Ukraine of December 02, 2010, № 2755-VI). Retrieved from: [in Ukrainian].

Pro opodatkuvannia prybutku pidpryiemstv: Zakon Ukrainy vid 28.12.1994 r. № 334/94-VR, stanom na 01.01.2003 r. (vtratyv chynnist) (On taxation of profits of enterprises. Law of Ukraine of December 28, 1994, № 334/94-BP, as of 01.01.2003 (repealed)). Retrieved from: [in Ukrainian].

Pro podatok na dodanu vartist: Zakon Ukrainy vid 03.04.1997 r. № 168/97-VR, stanom na 01.01.2003 r. (vratyv chynnist) (On Value Added Tax Law of Ukraine of April 03, 1997, №. 168/97-BP as of 01.01.2003 (repealed)). Retrieved from: [in Ukrainian].

Pro prybutkovyi podatok z hromadian: Dekret Kabinetu Ministriv Ukrainy vid 26.12.1992 r. № 13-92, stanom na 01.01.2003 r. [On Personal Income Tax. Decree of the Cabinet of Ministers of Ukraine of December 26, 1992, № 13-92 as of 01.01.2003]. Retrieved from: [in Ukrainian].

Ministerstvo finansiv Ukrainy. Ofitsinyi sait. Poperedni biudzhety. Biudzhet 2017 [Ministry of Finance of Ukraine. Official site. Previous budgets. Budget 2017] (2018). Retrieved from: [in Ukrainian].

OECD Data. Tax. Retrieved from:

Modica, E., Laudageand, S., & Harding, M. (2018). Domestic Revenue Mobilisation: A new data base on tax levels and structures in 80 countries. OECD Taxation Working Papers, № 36. Paris: OECD Publishing. Retrieved from

Tanzi, V., Schuknecht, L. (2000). Public Spending in the 20th Century: A Global Perspective. Cambridge: Cambridge University Press.

OECD. Addressing Base Erosion and Profit Shifting (Russian version) (2013). OECD Publishing. Retrieved on February 12, 2013 from

Stiglitz, J. (2015). Tax avoidance fuels global inequality. Retrieved from

The Concept of Tax Gaps. Corporate Income Tax Gap Estimation Methodologies. Taxation Papers. Working Paper № 73–2018 (FPG/041). Retrieved from

Zangari, E., Caiumi, A., & Hemmelgarn, T. (2017). Tax Uncertainty: Economic Evidence and Policy Responses. Taxation Papers. Working Paper № 67–2017. Taxation and Customs Union. Retrieved from

Minh Le, T. (2003). Value Added Taxation: Mechanism, Design, and Policy Issues. World Bank. Retrieved from

Lunina, I. O., Bilousova, O. S. (2018). Reformuvannia podatku na prybutok u konteksti zabezpechennia stiikosti derzhavnykh finansiv. [Reforming the income tax in the context of ensuring the sustainability of public finances]. Ekonomika Ukrainy – Economy of Ukraine, 7, 46–58. [in Ukrainian].

Kapitalni investytsii / Derzhavna sluzhba statystyky Ukrainy [Capital investment / State Statistics Service of Ukraine]. Retrieved from [in Ukrainian].

Vprovadzhennia innovatsii na promyslovykh pidpryiemstvakh / Derzhavna sluzhba statystyky Ukrainy. [Implementation of innovations at industrial enterprises / State Statistics Service of Ukraine]. Retrieved from [in Ukrainian].

Global Innovation Index. Retrieved from

Bilousova, O. S. (2017). Investytsiinyi potentsial ekonomiky Ukrainy ta krain YeS. [Investment potential of Ukrainian and EU economies]. Naukovyi visnyk Natsionalnoi akademii statystyky, obliku ta audytu – Scientific Bulletin of the National Academy of Statistics, Accounting and Audit, № 1–2, 60–67 [in Ukrainian].

Sadovenko, M. (2012). Prychyny ta naslidky vprovadzhennia podatkovoi reformy v Ukraini [Causes and consequences of tax reform in Ukraine]. Ekonomichnyi analiz – Economic analysis, Iss. 10, 2, 326–330 [in Ukrainian].

Modelling corporate tax reform in the EU: New calibration and simulations with the CORTAX model. Taxation Papers. Working Paper № 66–2016. Retrieved from

Lunina, I. O. (2015). Osoblyvosti ta naslidky zastosuvannia riznykh form podatku z oborotu. [Features and consequences of application of different forms of turnover tax]. Finansy Ukrainy – Finance of Ukraine, 6, 15–28 [in Ukrainian].

Lunina, I. O., Bilousova, O. S. (2017). Otsinka vtraty dokhodiv biudzhetu vid PDV. [Estimation of loss of budget revenues from VAT]. Ekonomika ta derzhava – Economy and State, 5, 13–18 [in Ukrainian].

Lunina, I. O., Bilousova, O. S. (2018). Instrumentarii prohnozuvannia biudzhetnykh naslidkiv podatkovoho stymuliuvannia innovatsiinoi diialnosti. [Toolkit for forecasting budgetary consequences of tax incentives for innovation]. Statystyka Ukrainy – Statistics of Ukraine, 2, 51–61 [in Ukrainian].

Tendentsii tinovoi ekonomiky v Ukraini u 2018 rotsi [Trends in the shadow economy in Ukraine in 2018]. Retrieved from

Pro skhvalennia Stratehii reformuvannia systemy upravlinnia derzhavnymy finansamy na 2017–2020 roky. Rozporiadzhennia Kabinetu Ministriv Ukrainy vid 08.02.2017 r. № 142-r [On approval of the Strategy for reforming the public financial management system for 2017–2020. Order of the Cabinet of Ministers of Ukraine of February 08, 2017, No. 142-p]. Retrieved from [in Ukrainian].

Pro skhvalennia Kontseptualnykh napriamiv reformuvannia systemy orhaniv, shcho realizuiut derzhavnu podatkovu ta mytnu polityku. Rozporiadzhennia Kabinetu Ministriv Ukrainy vid 27.12.2018 r. № 1101-r [On Approving Conceptual Directions for Reforming the System of Bodies Implementing State Tax and Customs Policy. Order of the Cabinet of Ministers of Ukraine of December 27, 2018, No. 1101-р]. Retrieved from [in Ukrainian].

Abstract views: 21
PDF Downloads: 18
How to Cite
BilousovаO. S. (2019). Assessing the Impact of Tax Reforms on the Long-Term Sustainability of Public Finances. Statistics of Ukraine, 86(3), 25-37.