253 million euros in the coffers of municipalities - Less income in the 8-month period. Local taxes fall by 26 million euros
Revenues collected by local governments have declined throughout this year, reflecting a less than satisfactory performance.
The 61 municipalities in the country have collected approximately 25.3 billion lek or 253 million euros in the first 8 months of the year. Official financial data show that compared to the same period a year ago, local government revenues are down by about 22 million euros.
The main impact on this performance is the decrease in local tax revenues by approximately 26 million euros.
However, if we analyze the same period of the last decade, we notice a progressive increase in local government revenues, and a three-fold increase since 2015.
Local government revenues, which include local taxes such as property taxes and small business taxes, remain largely dependent on state budget transfers. This dependence is an unfavorable indicator for local budgets, as local authorities are often unable to generate sufficient resources to cover necessary local expenditures.
Also, the dependence of local governments on state budget transfers has brought limitations regarding financial autonomy and support for pensions and social services at the local level. The growth of these revenues, especially from local taxes, is highly dependent on the fiscal and economic policies of the central government, and these transfers are often not sufficient to cover the increased demands for pensions.
Likewise, fiscal decentralization as the ratio of revenue distribution between the two levels of government continues to remain very low.
Referring to the annual local finance report, the two main sources that supply municipalities are the infrastructure impact tax and the building tax.
The largest increase in local government's own revenue sources is the "infrastructure impact tax." In this source, the municipality of Tirana holds the most significant share with 77.4%.
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