The Tax Policy of the State in the System of Regulation of Economic Development

The aim of the article is to reveal and deepen the theoretical and methodological provisions regarding the essence and significance of the State tax policy in the regulation of economic processes. The instruments of tax policy have been studied in the context of promoting the processes of sustainable economic growth. It is found that an important prerequisite for long-term economic development is the stimulation of aggregate supply. Followers of the theory of «supply-side economics» substantiate the appropriateness of establishing a moderate level of taxation for economic entities in order to create favorable conditions for the development of the economy. An analysis of the indicator of the ratio of tax revenues to GDP in the Member States of the European Union and in Ukraine from 2000 to 2023 has been carried out. Differences in the tax burden in EU countries have been identified. Central European and Baltic countries are characterized by a lower level of taxation compared to Western and Northern European countries. This is due to the need to form competitive advantages of the tax systems of these countries. It is determined that the mechanism of taxation of household incomes performs a redistributive function. In the vast majority of EU countries, with the exception of Romania, Bulgaria, Estonia, and Hungary, there is a progressive scale of personal income taxation. This approach ensures the implementation of the principle of social justice but requires proper substantiation of the scale of progression and a high level of effectiveness in the use of taxpayers’ funds. It has been identified that in order to eliminate the negative effects of taxation on the economy of the EU Member States during 2000–2023, income tax and corporate tax rates were reduced. On average, income tax rates were reduced by 6 percentage points down to 38.7%, corporate tax rates were reduced by 11 percentage points down to 21.2%. In addition to the regulation of tax rates, targeted tax incentives are an important tool for tax regulation of economic development. The expediency of further digitalization of the tax administration mechanism, improvement of tax compliance, and enhancement of the effectiveness of measures to counteract shadow economy schemes has been substantiated.