REGIONAL DISPROPORTIONS AND FISCAL ASYMMETRY IN UKRAINE UNDER MARTIAL LAW

Abstract

The purpose of the paper is to provide a comprehensive quantitative assessment and scientific-methodological substantiation of the scale of spatial fiscal asymmetry in Ukraine under martial law, alongside developing applied, adaptive recommendations for modernizing intergovernmental fiscal relations and financial equalization mechanisms, factoring in security and migration drivers. The paper investigates the structural and spatial transformation of the regional architecture of Ukraine’s tax system under the severe impact of exogenous military and political shocks during the 2022–2026 period. Methodology. The methodological framework relies on the core principles of spatial economics, public finance theory, and fiscal federalism. The study relies on a primary dataset compiled from the official records of the State Statistics Service, the State Tax Service, and the State Treasury Service, complemented by analytical disclosures from the Accounting Chamber of Ukraine. A complex of interconnected methods was utilized: comparative and trend analysis helped evaluate regional fiscal burden dynamics, mathematical-statistical modelling enabled the calculation of relative tax pressure indices on production factors (labour and capital), economic grouping served to differentiate regions according to security risk profiles, formulaic calculation identified the concentration coefficient, and the balance comparison method quantified net wartime fiscal losses relative to the pre-war baseline of 2021. Results. The results of the research demonstrate that military shocks have fundamentally polarized Ukraine’s fiscal map, causing a structural shift of fiscal potential from heavily impacted frontline zones to central and western rear regions. The calculated PIT concentration coefficient (0.548) indicates a dangerous systemic reliance on only six leading donor regions. Total net destructive fiscal losses across five critical regions reached UAH 44 billion, with Lviv oblast serving as the sole compensatory hub. Practical implications. The study substantiates the urgent necessity of transitioning by 2026 to a multi-criteria financial equalization model integrating demographic, security, and economic stimulation indices. The findings offer an applied tool for policymakers to modernise horizontal fiscal balancing, prevent the chronic insolvency of frontline territories, and optimize municipal tax-rate differentiation to stimulate local business environments. Value / originality. Quantitative data and spatial econometric modelling provide a better understanding of subnational financial resilience during high-intensity conflicts in general and offer a novel framework for reforming post-war intergovernmental fiscal relations in Ukraine in particular.