The issue of strengthening budget capacity for ensuring the financial independence of local authorities

The paper deals with the issues on strengthening local governments’ budget capacity in the face of modern challenges. It shows the conceptual in-depth study of local budgets foundations, income and practical recommendations focusing on stability and capacity. The author proves that the revenues of local budgets play a crucial role in ensuring the full and effective performance of the functions and local authorities’ tasks. The paper shows the scientific analysis of modern economists’ views on the local authorities’ financial autonomy and thelocal budgets’ role in the process. The paper also shows the retrospective comparative analysis of methods, used by local and foreign scientists for the formation of local budgets’ revenues. It considers the economic nature of income in local budgets as a source of finance, ensures the efficient operation of local authorities. It has been found out that the organization of the process of forming local budgets’ revenues is influenced by the organizational and legal forms of management, type of ownership and specifics of enterprises. Taxes are the dominant source of local budgets’ incomes, the financial regulator of production, means of ensuring socio-economic development of the separate administrative and territorial units and the state as a whole. The authors also analyze different types of revenues, including tax, in the revenue part of local budgets. The authors propose to expand the list of local taxes and fees due to the introduction of tax with targeted use of received funds. The conceptual basis of financial independence of local self-government lies in in the optimal interests of the population, local government, state and business structures. The increase of own revenues in the share of local budgets becomes a strategic issue of the financial autonomy and the corresponding administrative and territorial units.