Improvement of budget and tax system of Georgia according the example of EU countries

Abstract

The necessary term for existence and operation of the state is to create solid financial mechanism and financial base, which would support the settlement of such urgent and negative issues like: increase of shortfall in state budget, high rate of inflation; unsatisfactory search and attraction of foreign and own investment resources; financial market`s development on low level, frequent and unjustified changes in tax legislation. One of the key means to solve these issues is to reach a high level in mobilization of budgetary income - taxes, the existence of scientifically grounded tax system in the terms of exercise the sustainable tax policy. The tax policy which together with budgetary one creates the fiscal policy constitutes an integral part to the country`s economic policy.

Fiscal policy, being exercised by government, should answer the basic principles of construction of tax system of Georgia and should govern the economic relations inside the country. Besides, the realization of fiscal policy should foresee some of the functions of state management regarding the taxation: the financial function of state expenses or direct function of the taxes; maintenance of social equilibrium by altering the relationship of income among some particular groups, including the fix of inequality; state governance against the economy`s shortfall having sector, field and regional scale; Coming out of the experience of western leading countries, we consider expedient, that state central authority should revise their position and assign (charge) the income of Value-added Tax and / or Income Tax with governing function; scientifically grounded methods should be processed, which should specifically answer the necessary and strict requirements of realization of market economy and the state budget policy.