BEHAVIORAL FACTORS IN THE IMPLEMENTATION OF THE DIRECT TAXATION PARADIGM UNDER THE CONDITIONS OF THE STATE OF MARTIAL

Abstract

The fiscal efficiency of direct taxes is studied and the influence of behavioral factors on the implementation of the direct taxation paradigm in the conditions of martial law is determined. The system of direct taxation in Ukraine is structured. It is determined that the Ukrainian system of direct taxation in its composition and structure is similar to similar systems of developed European countries. At the same time, unlike the EU countries, the system of direct taxation in Ukraine is not an effective tool for increasing the state's competitiveness, doesn’t generate an increase in the economic activity of business entities. It is mainly fiscal in nature, however, its regulatory function is not fully manifested. To a large extent, these shortcomings were manifested during the full-scale invasion of the Russian Federation, because the Ministry of Finance of Ukraine and the State Tax Service of Ukraine did not have a clear plan of action regarding the adaptation of the Ukrainian tax system in general and the mechanism of direct taxation in particular to the realities of martial law. In addition, a significant number of decisions made by direct tax payers, which ultimately affected the amount of income and property taxation, were made impulsively, in a state of stress, depression, panic disorders, under the influence of cognitive biases, illusions and emotions. With the help of the main theories of behavioral finance, the factors that influenced financial decision-making in general and the implementation of budgets at all levels in particular are outlined. The dynamics of the state's budgetary resources, formed at the expense of the direct taxation system, are studied. The transformations of the fiscal effects of direct taxation in 2022 are analyzed. Tax innovations introduced under martial law are considered. It is proved that the forced external and internal migration of the population, curtailment of its business activity and entrepreneurial initiative, and the growth of unemployment negatively affected the fiscal effects of the taxation system. It is substantiated that in the conditions of uncertainty and deepening of security risks, the behavioral factors of paying direct taxes acquire significant (and sometimes - decisive) importance.