The tax formula for municipalities changes - New categorization, unconditional transfer according to the 2023 Census
The government anticipates that during the year 2025 it will change the formula for the unconditional financial transfer of the local government as well as the categorization of local taxes for the occupation of public space and facades for the use of advertisements/signs.
Changes to the Law "On Local Government Finances" are projected in the third quarter of this year, after the end of the general elections.
The changes aim to regulate the financing scheme of municipalities; The adaptation of the principle of equalization related to the number of the population according to the 2023 Census. It is also aimed at financial stability for municipalities with low incomes, as well as the change of the table that divides the municipalities by category.
These changes are expected to bring more income to the municipalities and a more accurate distribution of funds in proportion to the number of their population.
Referring to the official data of the Ministry of Finance, local government revenues for the period January-November 2024 reached the level of 36.6 billion ALL, with an increase of 8 billion ALL compared to the previous year or 27.9%, and a leap of 2 billion ALL in relation to the planning done.
The voice of local local taxes holds the largest weight, where the income in 11 months reached 29.5 billion ALL, with an increase of 6.4 billion ALL in relation to the previous year as well as at a record level throughout the decade.
But despite this positive performance in revenue collection, some municipalities still have arrears and are in financial difficulties, thus not offering the right services to citizens.
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