Tax policy and activation of internal factors of economic growth: EU experience for Ukraine

Abstract

The state policy of Ukraine aims to promote sustainable economic growth and improve its quality through economic activity, particularly through the optimization of the tax system, which is particularly relevant both during the period of martial law in Ukraine and the post-war recovery. The purpose of the study is to assess the formation and implementation of the state tax policy to activate the internal factors of economic growth in Ukraine under martial law. The study of tax policy in Ukraine and EU countries has shown that the EU countries are characterized by a consistent and transparent tax policy that stimulates investment, innovation, and entrepreneurship to activate internal factors of economic growth. The paper uses fiscal analysis based on the Cobb-Douglas production-institutional function; its main concept is the mutual location of the Laffer points of the first and second types and the actual level of the tax burden. The results show a noticeable adjustment of the real fiscal climate in Ukraine in line with changes in threshold fiscal standards. Considering martial law in Ukraine and the need for the state’s ability to post-war recovery, the study suggests changing the rates of specific taxes, after which it is necessary to make a transition from private fiscal instruments with inherent rate values to the aggregate fiscal burden.