Tax Analysis as a Driver of Financial Decision-Making and Fiscal Sustainability of Public Sector Entities: Evidence from the Berehove Territorial Community

Abstract

The relevance of this study is driven by the growth of fiscal risks and uncertainty in the functioning of local budgets under martial law, which necessitates a rethinking of approaches to building an own-source revenue base and managing tax revenues. The article addresses the financial sustainability and resilience of local self-government bodies under geopolitical instability and a wartime economy, with a focus on the budget management of the Berehove Territorial Community in 2021–2025. The purpose of the research is to provide an in-depth analysis of the structure and dynamics of the community’s revenues, as well as the role of fiscal decentralization in a wartime environment. The methodological framework is based on quantitative comparative statistical processing of budget reporting data, complemented by the systematization and synthesis of relevant scholarly sources. The findings indicate nominal revenue growth over the study period, driven primarily by inflationary factors and the adaptation of the local economy to martial law conditions. A distinct trend of compelled yet substantial strengthening of financial autonomy is identified: the share of tax revenues in total revenues increased from 45.41% (2021) to 61.31% (2024), while the proportion of state transfers declined markedly. Within the tax structure, alongside the dominance of the personal income tax, the role of local taxes—particularly the single tax and the real estate tax—has increased, reflecting a shift toward diversification of the revenue base. An analysis of the taxpayer structure confirms a dynamic rise in contributions from individual entrepreneurs, indicating the adaptability of micro and small businesses during the crisis period. The practical significance of the results lies in their applicability to budget planning and to the design of measures aimed at strengthening the community’s own-source revenue base, improving the effectiveness of local tax administration, and enhancing communication with taxpayers. It is substantiated that increasing the share of own revenues should be accompanied by the development of transparency instruments (open data, comprehensible budget reporting, visualizations) and mechanisms for citizen participation in setting budget priorities, which strengthens fiscal discipline and resilience to external shocks. The study concludes that the key prerequisites for long-term sustainability include expanding the own-source revenue base, digitalizing tax administration, and reinforcing fiscal transparency and public communication (including through participatory budgeting tools). It is demonstrated that anti-crisis tax policy is not only a financial and technical matter but also a function of societal trust and democratic accountability.