“Effectiveness of financial and economic regulation of land relations in ukraine in the context of the decentralization reform”

The sphere of local self-governance in Ukraine deals with a need for thorough researching and solving problems concerned with enhancing the effectiveness of financial and economic regulation of land relations on account of the expansion of the decentralization reform. The decentralization has led to gaining additional powers by bodies of local self-government. These powers entitles bodies of local self-government to ensure the increase of local budgets of newly-formed territorial units –united territorial communities – owing to carrying out financial transac- tions with land plots owned by local communities. In the process of research, the authors determine financial and economic efficiency of revenues of local budgets of perspective territorial communities by each region of Ukraine, taking into account variants of the normative monetary evaluation of land and the standard of capitalized rental income of agricultural lands located beyond their built-up areas. The authors substantiate an opportunity to create budget-forming sources of rev- enues for local budgets of perspective communities through the exercise of powers of bodies of local self-government regarding indicating the value of such lands and a right to lease, as well as terms of paying a single tax for the use of such lands for agricultural activity by taxpayers belonged to the fourth group of the simplified system of taxation.


INTRODUCTION
A need for normalization of socio-economic conditions of our country at the lowest level has stipulated the importance of a matter concerned with ensuring sustainable regional development in Ukraine. In the process of transformation of local self-governance, achieving an appropriate level of funding territorial units, which is possible in terms of adherence to the constitutional principle of autonomy of local budgets and organizing effective self-governance, is crucial. At the same time, it is necessary to take into consideration undertaking the first reforms related to decentralization of management in Ukraine focused on the hierarchy of territorial units, land relations, and ensuring financial autonomy of corresponding territorial communities. Since the enhancement of decentralization processes is problematic and occurs under conditions of an unstable political situation, it is necessary to further examine a matter of effectiveness of financial and economic regulation of land relations, taking into account the creation of the united territorial communities in Ukraine. Hence, the importance of the research is stipulated by decentralization tendencies of reforms that change traditional administrative powers of local self-governance and a territory of its jurisdiction, influencing regulation of land relations.

LITERATURE REVIEW
Since undertaking reforms in the sphere of decentralization of power in Ukraine is in the initial phase, scientists have hardly formalized problems of the formation and use of effective methods of managerial influence on the increase of financial assets and improving physical facilities of local self-governance at the expense of the inclusion of land plots in its assets.
Contemporary scientific papers oriented towards researching aspects of decentralization of power in Ukraine indicate that a majority of institutional changes in the country occur under unstable political conditions. Scientists consider matters of public preferences regarding regional decentralization in the context of post-Soviet Ukraine. Chaisty and Whitefield's (2017) researches are grounded on analyzing permanent political changes occurring in the country during the past decade. Scientific outcomes show that, under conditions of political uncertainty, institutional advantages of citizens are related to group identification and ideological orientations rather than to instrumental ones. Thus, decentralization effectiveness is liable to subjective assessment on the part of the public (Chaisty & Whitefield, 2017). Such process will not always demonstrate the real influence of its consequences on the socio-economic situation in the country.
Particularly, Hanushchak (2015), Hrynevetskyi, (2013), Kuibida et al. (2009) have examined legal, financial, and organizational aspects of reforming local self-governance in Ukraine from the standpoint of a new spatial basis for extension of powers of executive power bodies. Scientific papers of these scientists contain reasons concerning the necessity for such changes under conditions of the escalated economic situation in Ukraine. The abovementioned scientists have substantiated new frameworks for building the hierarchy of territorial units based on applying the criteria of the separation of powers between the government and local self-governance, developed the theoretical and methodological frameworks for organizing the executive power in Ukraine alongside with separating the powers of self-governments between the existing levels of local self-governance and territorial bodies of the executive power, and proposed directions for creating effective territorial units through indication of administrative and financial powers for bodies of local self-governance within their economic activity in the sphere of managing local property.
Outcomes of contemporary scientific research in the sphere of studying matters concerned with ownership of the land show that there are significant disadvantages of the domestic legislation in the context of regulating land relations. For instance, examining the use of the agricultural land, scholars identify clear regularities of land fragmentation in various agroclimatic zones of Ukraine and consider opportunities for exchange of land resources for efficient functioning of the land market (Kurylo, Pantaliienko, Bogdanets, & Ovcharuk, 2017). Having analyzed the prospects of market turnover of agricultural lands in Ukraine, the scholars substantiate the necessity for the use of transparent procedure in the field of commercial land transactions and emphasize that such process will precede the introduction of a free land market in Ukraine (Koroteiev, Korman, Manzii, Semenda, & Semenda, 2017). Contemporary scientific papers are grounded on studying new legislative initiatives in reforming land relations. Such scientists prove the absence of an open land market in Ukraine and inefficient functioning of financial mechanism for the governmental land regulation. Experts propose to eliminate such disadvantages through achieving an economic effect from cancellation of moratorium on the sale of agricultural lands (Frolov, Pedchenko, & Vygovska, 2017).
Financial and economic regulation of land relations in a majority of countries contemplates a system approach to the formation of a land market and building effective infrastructure for it. Researching this matter, scientists accentu-ate that only 20.7% (40 out of 193) countries are able to provide quality infrastructure (Willamson, Enemark, Wallace, & Rajabifard, 2010). Moreover, paradoxically, managing land resources assumes social functions based on exclusively ecological aspects of the land use. It is expedient to highlight contemporary outcomes of scientific research in the sphere of regulating land relations, which are based on applying the paradigm of land management and contemplate an opportunity of building an effective system of land administration (Samsudin, Lim, & McCluskey, 2014). First of all, such process is ensured by decentralization of "obligations of planning", which implies the formation of the local representational democratic responsibility for local needs.
Contemporary scientific researches confirm that nowadays the lease of land plays the role of a political instrument rather than economic one, because it creates various opportunities for owners and lessees in the process of the use of land plots owned by local self-governments (Gerber, Nahrath, & Hartmann, 2017). Such situation is inherent to the Ukrainian realities. Nonetheless, stability of property rights, e.g. in Switzerland, which derives from the current conception of exclusive ownership for municipal lands, contemplates implementing effective plans of the land use. Therefore, only the lease becomes a way of contractual collaboration that enables bodies of local self-government to apply this instrument for planning the effective land use under the division of land plots, e.g. for construction, and controlling over implementing these budgetary investment projects.
Nevertheless, contemporary scientific researches, particularly those concerned with studying consolidation of agricultural lands, reveal high effectiveness of opportunities regarding automatization of processes of land evaluation, which, under conditions of decentralization, is very relevant in Ukraine. Demetriou (2016) proves an opportunity of the increase of effectiveness of this process through the acceleration and cheapening of operations related to evaluating the land by 80%, as well as unification of these procedures, giving the example of the use of automatized models for evaluating agricultural lands in Cyprus. The existing approach contemplates that five members of the Land Evaluation Committee assess lands manual-ly and empirically, visiting each unique plot in a consolidated zone in order to determine the market value. In contrast to this approach, the proposal of increasing effectiveness of this process implies implementing a model for automatized evaluation of artificial neural networks together with a geographical information system. Moreover, since models for the land use are spatially explicit by their nature, planning, and management in the sector of lease (sale) of land, they have to integrate the geographical information system and spatial optimization, which enhance its effectiveness. Approaches to spatial optimization should include maintenance of planning the sustainable land use, particularly compactness, contiguity, and compatibility. Yao, Zhang, and Murray (2018) point out that balanced development of the land use contemplates the economic growth, social interaction, and protection of the environment, as well as underlies its long-term sustainability. Therefore, applying approaches for spatial optimization alongside with the use of corresponding procedures is also acceptable in Ukraine. It should be noted that automatization of processes of the normative monetary evaluation of agricultural lands in Ukraine will particularly enable to decrease corruption risks, ensuring transparency in the demarcation and division of land plots in terms of lease or sale. Since the natural and agricultural regionalization of lands of Ukraine underpins calculations of the normative monetary evaluation of agricultural lands, applying the geographical information system will allow enhancing effectiveness of public planning measures concerned with the rational use of natural resources being conducive to agriculture and adequate protection of them.
Such research discloses new opportunities for applying methods and procedures for decentralized management for the purpose of increasing the effectiveness of regulating land relations within implementation of the territorial reform in Ukraine. This will conduce to solving a problem of managing land plots passed into ownership of united territorial communities (UТС) and ensure a stable amount of financial assets and physical facilities at the expense of the formation of additional own-source revenues of local budgets from transactions with such objects.

METHODS
Research outcomes are based on applying the abstract and logical analysis for determination of the essence of financial and economic regulation of land relations under conditions of decentralization of the state power in Ukraine, statistical analysis for ascertaining the value of land plots, which are owned or are being passed into ownership of united territorial communities; a system and structural approach for determining financial and economic efficiency of the use of such lands based on various variants of the normative monetary evaluation. The chosen methods are oriented towards implementation of effective principles of financial and economic regulation of land relations through reformation of the hierarchy of territorial units in Ukraine. Key provisions, principles, and methods of contemporary economics and theories of regulation, finances, and economy constitute the theoretical and methodological basis for this research.
A purpose of the research contemplates determining financial and economic effectiveness of revenues of local budgets belonged to perspective territorial communities in Ukraine owing to the exercise of additional powers in the sphere of regulation of land relations by their bodies of local self-government.

RESULTS
The possession, use, and disposal of property, including the use of land plots, based on an ownership right, are inalienable rights of territorial communities in Ukraine. Hence, regulation of land relations contemplates a direct influence of the government and bodies of local self-governments on conditions of the use of land plots owned by local communities through applying financial instruments to increase corresponding local budgets. Therefore, a right to property for the land of united territorial communities should be extended to all lands within united territorial communities and effectiveness of regulation of land relations will depend on legitimacy of decisions of a body of local self-government.
However, legislators have begun to regulate the matter of passing state-owned land plots into ownership of united territorial communities only in 2018. This regulation is concerned with agricultural lands only (Cabinet of Ministers of Ukraine, 2018). In spite of these tendencies, financial assets and physical facilities of local self-governance supplemented by a communal resource in the form of agricultural lands located beyond built-up areas has enabled to form additional revenues for local budgets of united territorial communities only in terms of ensuring high effectiveness of financial and economic regulation of land relations since 2018 (Watamanyuk-Zelinska & Malets, 2018).
Indicators of the execution of local budgets of Ukraine in terms of revenues with regard to revenues from payment for communal land, including the land fee and rent of legal entities and sole proprietors, as well as revenues in the form of the single tax from taxpayers of the fourth group, are calculated on the basis of data on the execution of the state budget of Ukraine (Table 1).
To determine a share of this source of revenues for the state budget of Ukraine, let us consider and compare indicators of the execution of the budget with regard to revenues from the sale of lands and intangible assets. Comparability of the indicators is attributable to the fact that 10% of revenues from the sale of non-agricultural lands or rights to non-agricultural lands, which are owned by the state until the delineation of state-owned and communal lands, are included in the state budget (except non-agricultural land plots owned by the state, on which assets being subject to privatization stand) (Verkhovna Rada of Ukraine, 2010b). Correspondingly, 90% of such revenues are remitted to a development budget of local budgets.  Notes: * in revenues of the consolidated budget of Ukraine; ** in revenues of the state budget of Ukraine; *** in revenues of local budgets; **** in the payment for land (when payments, which had been referred to as the payment for land, fell under the category of local taxes in 2015, this name is not officially used; therefore, applying this name is stipulated by a necessity to present the data in the comparable format because this name was used in previous periods), data of 2014 are disclosed to compare tendencies, which have existed before implementing the reform of the hierarchy of territorial units and tendencies, which have existed after implementing the reform in 2015. It is worth mentioning that, after initiating decentralization processes and changes of the normative monetary evaluation of land plots, the largest share of revenues from the sale of land in revenues of local budgets, which accounts for 7.4% (UAH 889.9 thousand), is observed in 2015. This share remains within 5.45% (UAH 1,267.1 thousand in 2017) and tends to increase. Obviously, local budgets suffer considerable losses of financial resources due to the misuse in the sale of land plots or rights to them now. That is to say, there is illicit expropriation and the sale of such lands activated with completing the reform of the hierarchy of territorial units in Ukraine. For example, according to certain provisions of the Land Code of Ukraine, land plots owned by the state or local communities or rights to them together with state-owned or communal real estate, which is located on these plots, are subject to the sale in the form of separate lots on a competitive basis (land biddings). Nonetheless, this code contains a sufficiently large list of exceptions enabling bodies of local self-government to perform such transactions without conducting land biddings, e.g. "providing a private partner with state-owned or communal land plots within public-private partnership" (Verkhovna Rada of Ukraine, 2001). In Ukraine, there is also the widespread practice concerned with passing land plots into the use of communal enterprises with following subletting these plots by developers. In any case, such transactions lead to reducing amounts of possible revenues of local budgets, violating competitive conditions of functioning of a land market, emergence of a large amount of violations in the budgetary sector, the extension of the scope of corruption, and active selling of lands in built-up areas located near the cities of district and regional subordination prior to the unification of communities.  Since local communities already own 25.5 thousand ha of lands (The State Service of Ukraine for Geodesy, Cartography and Cadastre, 2017), bodies of local self-government, under the implementation of the territorial reform, have an opportuni-ty to apply for 3 million ha of state-owned agricultural lands, which are located beyond the built-up area, through acquiring the right of ownership in terms of forming the united territorial communities (Cabinet of Ministers of Ukraine, 2018). As can be seen in Table 2, this measure ensures the growth of revenues of local budgets from the use of such land plots by 30-40%.
Drawing on the analytical data on ways of the increase of local budgets belonged to united territorial communities at the expense of revenues from the sale of agricultural land plots located beyond built-up areas as objects of communal ownership (UAH 72,721.2 million) and forecasted indicators for amounts of revenues of budgets of UTCs from the sale of a lease right to such plots at established low prices (UAH 2,218.0 million per month), the authors may assert that an average payback period of the sale of lands accounts for 33 years. Until recently, a lease rate for a considerable share of those lands has been the lowest and accounted for 1-3%. In other words, they have been offered at prices lower than those established in the market. Bodies of local self-government have factually exerted influence on only 12% of own territories. United territorial communities have not been able to manage land plots before 2018, because those plots have been owned by the state and an opportunity of cultivating 7 million ha of "grey" lands has been excluded at all (Konkurent.in.ua, 2018).
Having analyzed possible revenues of local budgets of Ukraine, the authors determine that the amounts of revenues from the use of land plots located within built-up areas of united territorial communities may account for UAH 1,257,827.0 million from the sale of an ownership right and UAH 394,268.5 million from the sale of a lease right on average in Ukraine. This difference is stipulated by different values of a land plot within and beyond of built-up areas. The value fluctuates from 3.35 UAH/m 2 (minimum) beyond of built-up areas to 35.54 UAH/m 2 within builtup areas in Chernihiv region and 70.5 UAH/m 2 (maximum) in Lviv region. Sale and lease prices are higher for lands located within built-up areas of united territorial communities than for land plots, which will be passed into communal ownership. Therefore, a change in the purpose of use of the lesser contemplates the increase of revenues of local budgets from sale or lease of land plots. However, this change smooths out the use of these lands for running an agricultural business.
Nevertheless, economic efficiency of the use of land plots located beyond built-up areas is underestimated due to the low normative monetary evaluation in regions of Ukraine. For instance, an amount of the lease payment in more than 27 thousand of lease agreements for state-owned lands fluctuates from 1% to 3% of the normative monetary evaluation of lands, i.e. an average payment per 1 ha is only 940 UAH (approximately 30 EUR). For example, it accounts for more than 200 EUR per 1 ha of arable in Germany, the Netherlands, and Denmark, up to 10% of the market value or 350 USD-400 USD per 1 ha in the USA. Taxpayers spend 40-45% of grown harvest for lease payments in Canada and up to 1/3 of harvest in France (NGO "Civil Society Institute", 2018).
To determine financial and economic effectiveness of regulating land relations, the authors draw Table 3

CONCLUSION
Hence, to enhance financial and economic effectiveness of the use of agricultural land plots passed into ownership of a territorial community in terms of unification, the authors suggest: 1. Taking into account that the proportion between amounts of revenues from the sale of land plots located beyond built-up areas of amalgamated territorial communities and amounts of revenues from leasing these plots is 1 to 33 and the proportion for plots located within built-up areas is 1 to 3, the authors recommend that lease relations should remain a prevailing form of land turnover in Ukraine (Table 1). This will enable to regulate prices for land plots on the level of newly-formed territorial communities owing to new powers in the sphere of regulating land relations gained by bodies of local self-government in the process of the decentralization. In terms of legalization of 7 million ha of "grey" lands, which are already involved in agricultural production, the additional economic impact of their leasing for budgets of ATCs throughout Ukraine will constitute UAH 2.10 million. Such amounts have been determined at an average price of agricultural land plots by regions of Ukraine where these lands are available, namely boundaries of Volyn, Zakarpattia, Lviv, Poltava, Rivne, Ternopil, Khmelnytskyi, and Chernihiv regions. In such a case, revenues of budgets of ATCs from the sale of a lease right to land plots account for 13% of a general amount of revenues of all the local budgets of Ukraine, i.e. the economic impact will constitute 72,723.30 thousand UAH/year.

2.
Taking into account powers of bodies of local self-government regarding the establishment and changes in the purpose of use of land plots and the existence of an inconsiderable number of lands (0.23-2.28% of the entire area of regions) acquired by territorial communities in terms of unification in Volyn, Zakarpattia, Lviv, Poltava, Rivne, Ternopil, Khmelnytskyi, and Chernihiv regions, there is a need to forbid a change in the purpose of use of agricultural lands. Under such conditions, financial and economic efficiency of the use of such land plots through the sale of a right to lease accounts for from 123,206.17 UAH/year to 1,402,544.39 UAH/year.
3. To establish the value of leasing agricultural lands passed into ownership of ATCs on the basis of the difference between the factual lease payment and a sum of single tax from agricultural producers being taxpayers of the fourth group, activity of which is profitable, shows positive trends of the growth of a financial result, and is prior for regional development. This will enable to encourage socio-economic development of these regions, providing a financial and economic effect of revenues of budgets belonged to ATCs of Ukraine accounting for 16,369,127.09 thousand UAH/year, which will reach 17,064,227.09 thousand UAH/year after the deduction of UAH 695,100.00 thousand to the state budget. Such approach contemplates avoiding the payment for the use of land for production of agricultural commodities, which has been included in a basis of taxation of the single tax charged on agricultural producers, as well as in the lease payment for the use of agricultural lands.
If an amount of payment of the single tax exceeds a lease rate (as in Vinnytsia region), the authors recommend concluding a lease agreement. A proposition is of particular importance, because such contractual relations will not reduce a general amount of revenues of local budgets of perspective ATCs. Since rights to use such land plots have not been registered, such contractual relations ensure adherence to the current norms of the Tax Code of Ukraine regarding the value of leasing agricultural lands at the rate of 1% of the normative monetary evaluation as of January 1, 2019.
Nonetheless, such objects of a right to communal ownership perform economic, as well as social functions. The very context of the decentralization enables to undertake reforms in all the spheres of social development and to take into account ensuring a social effect, as well as forming necessary physical facilities for balanced development of newly-formed territorial units in order to foster combining principles of social responsibility and economic efficiency and to maintain the national security and state sovereignty of Ukraine.