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Functioning of a single social contribution: challenges and prospectsFunctioning of a single social contribution: challenges and prospects

Author(s) Malyovanyi M., Doctor of Ekonomikal Sciences, ,
Prokopchuk O.T., Candidate of Economics, , Uman National University of Horticulture, Ukraine
Category Economics
year 2020 issue Issue number 96. Part 2
pages 34-53 index UDK 336.027
DOI 10.31395/2415-8240-2020-96-2-34-53 (Link)
Abstract Problem statement. Obligatory state social insurance in the context of coverage of the population with insurance and the size of financial resources is one of the most important components of a three-level system of social protection in Ukraine.Difficult demographic situation and economic crisis in Ukraine generate a considerable deficit of financial resources to perform functions that obligatory state social insurance is facing. One of the main directions to solve this problem is to increase the level of receipts through a gradual unshadowing the economy by reforming the procedure of assessment and payment of single social contribution (hereafter – SSC). Aim of the research. The goal of the study is to substantiate the directions of reforming the conditions of assessment and payment of SSC that lie in the gradual (evolutionary) distribution of the payment burden of SSC between an employer and an employee. Methods of the research. Theoretical and methodological principles of the research are scientific approaches to determining the problems and prospects of the functioning of SSC in Ukraine in terms of providing the system of obligatory state social insurance with financial resources. To conduct the research the following methods were applied: comparison, statistic, graphic, abstract and logical methods. Findings of the research. In order to fight the shadow economy, namely concealment of salary (income) from taxing, the SSC rate was reduced to 22% in Ukraine. It has been found that drastic reduction of SSC in 2016 without complex approach to solving other problems of the existing shadow economy, on the one hand, led to a considerable deficit of funds in the system of obligatory state social insurance (the need in the budget funds increased from 83,2 billion UAH in 2013 to 181,8 billion UAH in 2019). On the other hand, it hasn’t brought real results as to the unshadowing of the economy in Ukraine (over 2016–2019 the size of a shadow sector of the economy decreased only by several points). To reduce the size of the shadow sector of economy and to increase the receipts of SSC the authors suggest gradual (evolutionary) distribution of the burden of the SSC payment between employers and employees. It is suggested to use a regressive scale of insurance rates for further decrease of the burden on employees that receive high salaries. Conclusions. Suggested approach to a gradual provision of an even burden from SSC payment between an employer and an employee will allow:1) to decrease gradually the burden on the payroll for employers from 22,0 % in 2020 to 13,5 %; 2) to avoid a considerable deficit of financial resources (in case of optimistic development of events (a rapid reduction of shadow economy), it is even possible to expect the increase of receipts from payment of SSC in the first years); 3) to increase the level of tax culture across the population and to gradually form the responsibility of employees for their own lives.
Key words obligatory state social insurance, single social contribution (SSC), regressive taxing scale, insurance rate, budget, deficit.
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