L.B. Ryabushka
Ph.D, Associate Professor, D. V.
Bondarkova
Ukrainian Academy of
Banking of The National Bank of Ukraine, Sumy
THE SHADOW ECONOMY AND STATE BUDGET IN UKRAINE
Increasing shadow economy leads to
negative consequences and containment of social and economic development that result to reducing of the state programs in the Ukraine. Therefore, the issue of repayment funds from the legalization of the
shadow economy and detection lost government revenues
in the structure of the State Budget is important. Analysis and systematization of scientific views on
the interpretation of the term "shadow economy" has allowed to
formulate the author statement which, in our opinion, is the most exhaustive. The shadow economy is an economic activity of businesses and individuals
that direct to generate revenues and meet human needs. It is characterized by
uncontrollable processes of production, distribution, exchange and consumption
and doesn’t take into account in official statistics. Such structuring
components as forms (criminal, not legal, illegal, informal, not official),
types (internal and external, intentional and unintentional, individual and
collective), shapes (second, gray, black), groups (one-time, seasonal,
permanent) belong to the structural elements of the shadow economy. The factors
of influence of the shadow economy on government revenues are grounded in the
investigation: economic (financial crisis, the high level of taxation), social
(low standard of living, high unemployment), legal (low level of equipment of
law enforcement agencies, the low level of legal culture, weak training of
workers of law enforcement
institutions), institutional (corrupt
public services of various government structures, the use of state property
organizational structures for receiving informal private income by government
officials and managers). And there are factors that influence on the shadow
economy: subjective (falling-off of production or crisis in defining sectors of
economics, shortcomings in the current models of competition), objective
(existence of socially active group of people who violate the legislation in
order to obtain certain economic benefits). Actually, in the context of the
research we showed the influence of the level of shadow economy on the
formation of government revenue of the State Budget in Ukraine. The influence
of the level of shadow economy on government revenue of the State
Budget can be assed by the use of economic-mathematical
method of correlation and regression analysis.
Figure 1 : Development of
shadow
economy and government revenues, % GDP 
Overall,
there was the gradual growth of government revenues of the State Budget from
92.5 billion to 398.3 billion and the level of shadow economy - from 28% to 34% of GDP for the period
2004-2011. The
sharp increase of the level of shadow
economy led to a decrease of
tax revenues, capital taxes, social contribution and other revenues in 2009-2010. This tendency is showed
the deviation of enterprises from paying tax to the State Budget. The results of
the analysis showed that a gradual increase of the level of
shadow economy led to a gradual increase of
government revenue of the State
Budget
in general and in the context of its components. But
with a significant growth of the shadow economy they
observed
a sharp decrease of shadow
economy of the State
Budget. The increase of the shadow economy led to a decrease of revenues by
reducing non tax revenues, corporate income tax, tax on income, capital tax and
social contribution. As a result it is necessary to calculate the amount of
lost government revenues of the State Budget taking into account the level of
shadow economy by the following formula:
,
(1)
where 
– lost government
revenues
of the State Budget;
– real goverment revenue of the State Budget in context of its
components (tax revenue, corporate income tax,
tax on income,
value added type tax, capital tax and
social contribution); 
– the level of shadow
economy in the t-th year; 
- coefficient of
the influence of
the level of shadow economy on goverment revenue of the State Budgen in the context of the
components
(coefficient of the influence of the level of shadow
economy on revenues evaluated on the basis of correlation and
regression analysis).
The
influence of the level of shadow
economy on tax revenues is 0.11, on the
value added type tax is 0.05, on
corporate income tax is 0.57, on tax on
income is 0.71, on tax revenues is
0.57, on capital tax is 0.54, on social contribution is 0.58. According to
the calculations in general the lost government revenue of the State Budget is
151.84 billion, including tax revenue - 56.31 billion. (corporate income tax -
55.41 billion, value added type tax - 9.63 billion., tax on income - 73.32
billion), non tax revenues - 83.51 billion, capital tax - 5.86 billion., social
contribution - 6.16 for the period
2003-2011's. There is a forecast of lost government revenue of the State Budget
based on the basis extrapolation for 2012-2014 years. They forecast the growth of lost
tax revenue, corporate income tax, tax on income, value added type tax, capital tax and social contribution. The Growth
rate of lost government revenue of
the State Budget will
be 35.63% at the end of 2014 year. The
results of the forecasting emphasize expert evaluation of deterioration of
financial stability, sequestration of real government revenues of the State Budget for the next
three years due to the recession of the economy of Ukraine
and to the increasing of the level of shadowing. The
necessity of strengthening measures against
the shadow economy is proved in the following
directions in Ukraine: strengthening the financial security and monitoring
money laundering, development and implementation of the annual programs of struggle
with shadow economy, combating with violations, increasing the transparency of
government, improving the legislation with the
purpose of decreasing of the level of shadow economy.