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REPUBLİC of AZERBAİJAN on the Rights of the Manuscript DIRECTIONS of IMPROVING FINANCIAL ENSURING of LOCAL SELF-GOVERNMENT IN

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REPUBLİC of AZERBAİJAN on the Rights of the Manuscript DIRECTIONS of IMPROVING FINANCIAL ENSURING of LOCAL SELF-GOVERNMENT IN REPUBLİC OF AZERBAİJAN On the rights of the manuscript DIRECTIONS OF IMPROVING FINANCIAL ENSURING OF LOCAL SELF-GOVERNMENT IN AZERBAIJAN Specialty: 5308.01 - “General economy” Science: “Economics” Applicant : Vugar Ahmad oglu Mammadli ABSTRACT of the presented dissertation for the degree of Doctor of Philosophy BAKU 2021 The dissertation work was carried out at the Department of “Financial and economic theory” of the Azerbaijan State Agrarian University. Supervisor of studies: Doctor of economic sciences, professor Fizuli Aziz oglu Mammadov Official opponents: Doctor of economic sciences, professor Mahabbat Ashir oglu Mammadov Ph.D in economics, associate professor Kamran Nureddin oglu Abdullayev Ph.D in economics, associate professor Samira Raqif kizi Ahmedova ED.1.10 Dissertation council operates under the “Institute of Economics” of ANAS under the “The Supreme Attestation Commission Attached to the President of the Republic of Azerbaijan” GENERAL CHARACTERISTICS OF THE WORK Actuality of topic and working degree: Reforms in the field of local self-government in Azerbaijan cover all aspects of socio-economic development of municipalities, including local finance. Almost today, the main tasks of local self- government bodies are to find resources and develop the municipal economy in order to ensure the effective functioning of the socio- economic system in the area along with the implementation of local budgets. At present, the budgets of municipalities are insufficient in comparison with the powers (status) granted to local self-government bodies in the country. The income of municipalities is not enough to finance the authorities related to the living of the population (for example, housing and communal services, education, health). Increasing the role of local self-government bodies in the promotion of the human factor in regional socio-economic development and the availability of independent decision-making in this area remains an actual issue. Thus, the current development and opportunities of the municipal system, which is chosen from the point of direct contact with the population, are not always at the desired level. Despite the fact that the financial support of local self- government in Azerbaijan is strengthened by the formation of the local tax system, municipalities do not yet have stable financial resources. The main reason for this is the low level of collection of local taxes and the lack of development of municipal entrepreneurship. Comprehensive analysis should be carried out in this area, theoretically substantiate the problems of tax and non-tax revenue formation of local budgets. All this gives special urgency to the issues of improving the financial security of municipalities. Also, the need for complex research provided the urgency of the subject of the presented dissertation. Recent changes to legislative acts on financial security of municipalities, i.e. recent changes in tax legislation, give special urgency to the subject. In particular, the implementation of the local tax and payment procedure only in cashless manner, the procedure 3 for calculating property tax from individuals, land and mining tax rates were aimed at improving the financial security of municipalities as a requirement of the day. Improving the financial security of local self-government bodies and increasing the role of local self-government bodies in the management of the socio-economic development processes of the territory has always been actual in the states that have taken the path of democratic development. Although it has been operating in our country for more than nineteen years, increasing the role of municipalities at the stage of regional management is one of the priority directions of the state policy. The solution of local problems through the use of the opportunities of municipalities as the closest management body to the population necessitates the development of local self-management. Features of local financial policy, preparation of local budgets, improvement of local taxation, economists of our country by A.Musayev [69, 70], B.X.Atashov [32], M.C.Huseynov [41], Sh.H.Hacıyev [38], F.Sh.Hacıyev [37], X.A.Huseynov [40] and others extensive research were realized. In connection with this problem, the research of foreign economists such as Q.B.Polyak [107, 108], B.M.Sabanti [113], L.L.İqonina [89], E.S.Sinisina [116], N.Q.Filatova [120], E.V.Xmelevskaya [123], U.O.Nikitkova [102], Q.M.Kolpakova [92], N.V.Postovoy [110], M.İ.Yandiyev [129], V.N.Voblenko [77], A.Q.Voronin [78], A.M.Yemelyanov [86], I.V.Yefimcuk [87], H.H.Lityaqin [94], I.D.Cernik [125] and others are also of particular importance. Strengthening the role of municipalities in solving local issues and problems, directions of increasing local financial resources and optimal organization of counter-centralization of finance have not been adequately studied. Therefore, there is a need to study the development of municipalities in terms of financial security. The purpose and tasks af the research: The purpose of the dissertation work is to develop scientifically substantiated proposals to improve the financial provision of local self-government in Azerbaijan through the management of local 4 taxation and efficient use of municipal property and to ensure the financial freedom of municipalities. Concretely tasks were defined to achieve the objectives in the study. - To study the theoretical and legal conditions of financial provision of municipalities by making proposals to improve the legislation; - Investigation of the role of municipal property in the financial provision of local self-government; - To assess the position and role of local taxation management in the financial security of municipalities. - Assessment of the current state of local finance. - Determining the structure of financial resources of local self- government. - To reveal the directions of formation of financial resources of municipalities in Azerbaijan. -Investigation of state support to municipalities. - Formulate the scientific and methodological basis of the organization of the local taxation management system, which is a key element of improving the financial security of municipalities. Research methods : The theoretical and methodological bases of the study are decrees and orders of the president of the Republic of Azerbaijan on the financial support of municipalities, laws adopted by the Milli Majlis of the Republic of Azerbaijan, as well as normative-legal documents adopted by the Cabinet of Ministers, scientific works of local and foreign economists conducting research in this field. In the research systematic approach, comparative analysis, economic-statistical analysis, deductive, economic-mathematical programming methods were used. Basis provisions of defence: - The development and activity of municipalities directly depends on their financial security. - Despite the policy of unification of municipalities in Azerbaijan, there are still municipalities with a very weak financial situation. - The main element of local financial policy should be the management of municipal property. 5 -As in some countries, instead of allocating part of state taxes to local budgets, it is necessary to increase the collection of local taxes and fees established by the country's legislation. - Reforms carried out in recent years to improve the land tax, along with improving the financial provision of municipalities, is a step aimed at the development of the agricultural sector in the country. - Although the determination of the tax base in Azerbaijan by the size of the property area has led to an increase in local budget revenues on property taxes in some municipalities, there are certain problems in the collection of this tax. - Municipalities have problems with the collection of mining tax. - The level of state aid on the local budget should be increased. -Municipalities should create an internal control system, an internal audit service that evaluates that system and use the services of independent auditors in this area. Scientific novelty of the research : The scientific novelty of the research consists of: - Within the framework of the financial policy of the state, the financial problems of the local self-government were investigated and the directions of improvement of financial security of municipalities were shown. For the first time in Azerbaijan, the financial resources of municipalities were grouped on the basis of various criteria (“Problems of increasing the financial resources of local self-government.” ANAS, Scientific Works, 2017-№6). - Economic composition was opened by indicating the role of municipal property in the implementation of local self-government development strategy. For the first time, indicators for the management of municipal property and the use efficiency of property have been identified in Azerbaijan ("Economic development of local self-government bodies through effective management of municipal property", Economics and Entrepreneurship, Moscow -2017, №3). - The current state of local finance has been analyzed and economic indicators reflecting the financial situation of municipalities have been identified. The financial situation of several municipalities was assessed on the basis of these indicators (“Assessment of the current 6 state of local finance.” Cooperation. 2018, №2). - The effect of changes in the national legislation on land tax and improvement of tax base on property tax from individuals on land tax on the collection were substantiated, the
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